Gold trades above $1200

Spot gold was steady at $1,202.20 an ounce, after gaining 0.6 per cent on Friday. Gold got a boost from short-covering after China cut interest rates unexpectedly on Friday, stepping up efforts to support the world's second-biggest economy as it heads towards its slowest expansion in nearly a quarter of a century, saddled under a mountain of debt.

China's leadership and central bank are ready to cut interest rates again and also loosen lending restrictions, concerned that falling prices could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making.

Bullion also got support from comments from European Central Bank President Mario Draghi that opened the door for more drastic measures to prevent the euro zone from sliding into deflation. Gold is seen as a hedge against inflation and slowing economy.

Hedge funds and money managers boosted their net long position in gold futures and options in the week to Nov. 18, as they switched to a net long in silver, the Commodity Futures Trading Commission said on Friday. The Swiss National Bank on Sunday repeated its opposition to a proposal that would force the central bank to boost its gold reserves, with just a week to go until Switzerland votes on the issue.

The Dutch central bank has repatriated more than 120 tonnes of gold from vaults in the United States, it said in a statement on Friday, in a move it believes could have ‘a positive effect’ on public confidence.