Gold hits 15-month high above $1,300/oz as dollar wilts

By Marcy Nicholson and Jan Harvey

NEW YORK/LONDON (Reuters) - Gold rose to a fresh 15-month peak above $1,300 an ounce on Monday in holiday-thinned trade as an early retreat in the dollar drove prices higher, though it later eased as the U.S. currency pared losses.

Many Asian markets and London were closed for national holidays, dampening momentum in the precious metal, which posted its biggest weekly rally since early February last week, up more than 5 percent.

That was chiefly driven by weakness in the dollar, which had its worst week since 2008 versus the yen after the Bank of Japan unexpectedly opted against further monetary easing. The U.S. currency stayed on the back foot on Monday.

Spot gold (XAU=) peaked at $1,303.60 an ounce, its highest since January last year, before easing 0.2 percent to $1,290.90 an ounce by 2:01 p.m. EDT (1801 GMT). U.S. gold futures (GCv1) for June delivery settled up 0.4 percent at $1,295.80 an ounce.

"The dollar is very weak, especially against the yen, and the white metals all look very healthy, so maybe on the back of that gold may get a bit of a follow-through," said Afshin Nabavi, head of trading at MKS.

"I think we're heading for new numbers on the upside."

U.S. stocks (.SPX) and U.S. Treasury yields rose as the U.S. dollar (.DXY) weakened against a basket of currencies for a sixth session to hit the lowest since January 2015. [MKTS/GLOB]

"You've got a flight to safety trade going on globally," said Bob Haberkorn, senior market strategist for RJO Futures in Chicago.

However, the price of gold failed to hold above the new $1,300 handle.

"People are more inclined to buy it when it's at $1,310, $1,315, when it's confirmed it's through the handle."

Data on Friday showed hedge funds and money managers cut their net long position in COMEX gold futures and options in the week to last Tuesday, when they lifted their bullish silver position to a record high.

"We believe that speculative financial investors have been driving the gold price up significantly of late," Commerzbank said in a note. "The same also applies to silver, platinum and palladium."

Silver (XAG=) was down 1.8 percent at $17.50 an ounce, having also hit its highest since January last year at $18.01. Platinum (XPT=) was up 0.6 percent at $1,080.50 an ounce, after rising to a 10-month high at $1,085.40.

Palladium (XPD=) was down 0.5 percent at $621.23 an ounce.

(Additional reporting by A. Ananthalakshmi in Singapore; Editing by Jane Merriman and James Dalgleish)