Gold firmed towards a record on Monday, while bullion priced in euro and sterling struck all time highs as falling currencies and fears a European bailout package could hurt, rather than help a recovery, spurred investor buying.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose to a lifetime high of 1,214.065 tonnes as investors sought a safe haven from volatile currencies as well as declines in stock markets and oil.

Spot gold was at $1,239.90 an ounce by 0326 GMT, up $9.85 from New York's notional close on Friday, when it etched a record of $1,248.95 before slipping. Bullion has gone up around 13 percent this year.

"Of course gold still looks bullish. I don't know what the ceiling is. People talk about $1,300, $1,400. We have to break $1,250 to see new highs," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

While dealers noted short covering from investors, some jewellers sold back their holdings from cash but in small quantity, Leung said. "There's a bit of selling in the physical side. They will be more aggressive when we see a new high."

US gold futures for June delivery added $13.2 per ounce to $1,241 an ounce. Gold priced in euro and sterling struck records.

The euro tumbled to a four-year low on Monday on persistent worries that harsh spending cuts mandated by a $1 trillion bailout plan may choke off a fragile recovery in the euro zone. Sterling hit a fresh one-year low against the dollar.

German Chancellor Angela Merkel said on Sunday the rescue plan stitched together by the European Union and the International Monetary Fund only bought time to sort out the yawning gap between the euro zone's strongest and weakest economies.

In Singapore, dealers noted persistent selling from jewellers in Indonesia, but there were some inquiries from investors in Thailand, which could be tied to the deadly violence in Bangkok.

"If you like the situation in Europe, it doesn't seem to get better. Of course gold is still a better bet. We expect gold to revisit the recent highs," said a physical dealer in Singapore.

Japan's Nikkei average slipped 2 per cent on Monday after the euro hit a four-year trough and slides in overseas shares stoked fears the global economy could sustain more damage than expected.

Oil fell below $70 a barrel on Monday, to its lowest in more than three months, extending a loss of nearly 17 percent over the past two weeks on fears over Europe's debts, the weak euro and swollen US oil inventories. – Reuters