Gold slips from four-month high, haven appeal lends support

By Jan Harvey

LONDON (Reuters) - Gold eased from four-month highs on Monday as investors cashed in some of last week's hefty gains, though prices were still supported by wider market volatility that boosted the metal's appeal as a haven from risk.

A market rout after Switzerland unexpectedly abandoned a cap on the franc last week triggered strong bids for gold, often seen as an alternative to risky assets, sending prices to their highest since September at $1,281.50.

While it edged back from that level on Monday, traders said that gold remained supported as the market braced for further volatility in a critical week for the euro zone.

Expectations are high that the European Central Bank will unveil a bond-buying stimulus package at a policy meeting on Thursday, while the anti-bailout party Syriza maintains a lead in the polls going into Greece's general election on Sunday.

Spot gold was down 0.4 percent at $1,274.61 an ounce at 1652 GMT, while U.S. gold futures for February delivery were down $1.50 an ounce at $1,275.40. Spot gold is up nearly 8 percent this year.

"Since the beginning of the year you've had several issues combined - economic anxiety in Europe, the euro dropping to a nine-year low, the ECB contemplating quantitative easing and Switzerland last week," Natixis analyst Bernard Dahdah said.

"If you put them all together, you can see the reasons why gold prices are (higher)."

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, climbed 13.7 tonnes to 730.89 tonnes on Friday, its biggest one-day inflow in nearly 3-1/2 years.

Speculators raised their net long position in gold for the third straight week, ending Jan. 13, U.S. Commodity Futures Trading Commission data showed on Friday.

Liquidity was thin on Monday with the U.S. markets closed for a holiday. Some investors were taking advantage of last week's price rise to cash in gains, dealers said.

"There's a little bit of profit-taking that's come in and a little bit of physical selling - nothing huge yet, but it's the first time we've seen this level for a while, so people are a bit excited," said Afshin Nabavi, head of trading at MKS.

Silver was down 0.3 percent at $17.68 an ounce, while platinum was flat at $1,263.25 and palladium up 0.4 percent at $754.22.

Palladium bucked the trend for precious metals last week, falling more than 6 percent.

(Additional reporting by A. Ananthalakshmi; Editing by Michael Urquhart)