Gold futures edge higher to extend gains

SYDNEY (MarketWatch) � Gold futures ticked higher Monday, with some analysts suggesting that gold demand will improve ahead of the upcoming Chinese New Year.

Gold for April delivery GCJ3 �rose $1.40 to $1,672.00 an ounce in electronic trading during Asian market hours Monday.

The precious metal had advanced $8.60, or 0.5%, to settle at $1,670.60 in regular trading on the Comex division of the New York Mercantile Exchange Friday.

Investors Friday reacted to a slew of mixed U.S. economic data that resulted in increased demand for gold while keeping upside in check. Read: Gold up in wake of jobs data, scores weekly gain.

A weaker dollar on Friday helped foster demand for gold although the ICE dollar index DXY , which measures the greenback against a basket of six currencies, rose to 79.269 Monday from 79.097 Friday.

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However, HSBC metal analysts saw some support for gold prices in the short term from increased demand for physical bullion in China ahead of the start of Chinese New Year on Feb. 10.

�We remain positive on bullion but see resistance near the psychological $1,700 an ounce level,� the analysts said.

Meanwhile, Fawad Razaqzada, technical analyst at GFT Markets, is encouraged that gold is holding above its 200-day moving average.

�There is also a long-term trend line slightly below the average so things still look bullish for gold. But it needs to take out the $1,695 an ounce resistance level in order to encourage fresh buying interest,� the analyst said.

Around the wider metals complex, silver for delivery in March SIH3 �declined 13 cents to $31.82 an ounce, while copper for delivery in March HGH3 �traded flat at $3.78 a pound.

April platinum PLJ3 �rose $18.80 to $1706.50 an ounce, while March palladium PAH3 �added $5.35 to $761.75 an ounce.

The HSBC analysts noted that January sales data from the U.S. auto sector out recently has helped support platinum group metal prices.