Gold edged lower on Monday as investors exited positions after mostly upbeat US data signalled that the economic recovery is gaining traction, while a dip in stock markets and a stronger dollar added pressure.

Platinum group metals outperformed, with palladium hitting its highest in 17 months and platinum a four-month high, following strong US auto sales reports for January and a downbeat earnings statement from major platinum miner Anglo American Platinum.

Spot gold eased 0.1 per cent to $1,664.55 an ounce by 1059 GMT, while US gold futures for April delivery were down 0.3 per cent to $1,665.50 an ounce.

In Japan, benchmark gold on the Tokyo Commodity Exchange hit a record high on the back of a weak yen on expectations the Bank of Japan will continue loosening monetary policy.

A dip in stock markets and the euro removed some support for gold, while data released Friday showed hedge funds and money managers had slashed gold's net length in futures and options last week on signs of a steadily improving US economy.

Its losses were limited by buying interest in Asia as China approached a week-long Lunar New Year holiday that starts on February 9, but traders said this support was likely to be temporary.

"Physical demand is reasonably good because the Chinese New Year is round the corner and will continue to hold the market this week, but next week Asian markets will be on holidays and that source of support will disappear," Bernard Sin, senior vice president at MKS Finance, said.

"Markets may react dramatically."

Gold players were seen reassessing their positions after last week's mixed US economic data failed to provide a clear direction for the market, analysts said.

US payrolls numbers surprised to the downside, triggering a $10 jump in the metal, but these were offset by strong consumer confidence and ISM manufacturing numbers, and comments from a Federal Reserve official suggesting that monetary easing could be scaled back later this year.

"The weaker-than-expected Q4 US GDP data served to prove how negative data could quickly push gold prices higher, but equally the absence of both a solid floor set by physical demand and strong investor conviction shows how quickly gains are surrendered," Barclays Capital said in a note.

"Gold is without structural support at the moment, but given speculative positioning remains relatively light, weaker-than-expected macro data could quickly spur prices higher amid global balance sheet expansion."

PLATINUM, PALLADIUM CLIMB

Platinum group metals posted hefty gains after US automakers reported a 14.2 per cent sales increase in January from a year earlier, with a seasonally adjusted annualised rate of sales reaching 15.29 million vehicles.

The metals are widely used in auto catalysts to clean up exhaust emissions.

Momentum picked up when major producer Amplats revealed a significant full-year loss on Monday. The company has cut its output target to 2.1-2.3 million ounces a year and slashed capital expenditure by 11 billion rand ($1.2 billion). It plans to cut capex by 25 per cent over the next decade to 100 billion rand.

Spot platinum rose as much as 1.5 per cent to $1,705.25, its highest in four months, and was last seen at $1,695.49, up 0.9 per cent.

Spot palladium gained as much as 0.7 per cent to $759.75, its loftiest level since September, 2011, before settling at $755.22 an ounce, up 0.1 per cent.

Platinum has outperformed the rest of the complex with a nearly 11 percent gain so far this year, followed by a 9 per cent rise in palladium. Gold is down 0.3 per cent - the only precious metal in the red after a 12-year winning streak.

The Commitments of Traders data for the week ended January 29 showed platinum net long positions rising by 171,150 ounces to 2.72 million ounces and palladium net long positions up by 357,500 ounces to 2.6 million ounces.

"Palladium net long positions continue to reach new highs, running the risk of a pullback," HSBC said in a note. – Reuters