Gold holds gains after best month since 2012

Gold steadied above $1,280 an ounce on Monday after posting its biggest monthly gain in three years in the prior session following weaker-than-expected U.S. economic growth in the fourth quarter.

Bullion is likely to maintain its safe-haven appeal amid renewed concerns over the global economy with data showing China's factory sector shrinking for the first time since 2012.

FUNDAMENTALS

Spot gold was off 0.2 percent at $1,280.77 an ounce by 0036 GMT after rising 2 percent on Friday. It ended January with a gain of 8.4 percent, its largest monthly increase since January 2012.

U.S. gold for April delivery rose 0.2 percent to $1,281.60 an ounce.

U.S. economic growth slowed to a 2.6 percent annual pace from a 5 percent rate in the third quarter as weak business spending and a wider trade deficit offset the fastest pace of consumer spending since 2006.

China's factory sector unexpectedly shrank for the first time in nearly 2-1/2 years in January and firms see more gloom ahead, raising expectations that policymakers will take more action to forestall a sharper slowdown.

Greece's leftist government began its drive to persuade a sceptical Europe to accept a new debt agreement while it starts to roll back on austerity measures imposed under its existing bailout agreement.

Greece's new left-wing government will cancel plans to sell the state natural gas utility and is firmly opposed to a Canadian-run gold mine that is among the biggest foreign investment projects in the country.

U.S. Mint American Eagle gold coin sales in January rose from December but were the lowest for that month since 2008, as a rally in prices discouraged collector buying in what is typically a period of peak demand.

MARKET NEWS

The yen rose while commodity currencies softened as worries about the health of the Chinese economy dealt a fresh blow to sentiment already unsettled by a selloff on Wall Street. Asian shares got off to a downbeat start. [USD/] [MKTS/GLOB]

Oil prices fell as unions called a strike at U.S. oil and chemical plants on the weekend, cutting some of the gains made late last week when prices roared more than 8 percent on a sharp drop in U.S. drilling.