Gold stands tall, nears highest level in seven weeks

Gold hovered near its highest level in almost seven weeks on Monday as worries over a slowing Chinese economy pushed investors away from risky assets and into those deemed as safe haven.

Asian equities tumbled, the US dollar retreated and industrial commodities from copper to oil slid to their weakest since 2009.

"Gold is rising on market fears," said Howie Lee, analyst at Phillip Futures in Singapore. Lee said gold looks on track to rally to $1,200 an ounce, a level last seen in June.

Spot gold was little changed at $1,160.80 an ounce by 0236 GMT, after touching a high of $1,165.11 in early deals.

Gold rose to as much as $1,168.40 on Friday, its highest since July 7. It gained more than 4% last week, the most since mid-January.

Fears of a China-led global economic slowdown drove Wall Street to its steepest one-day drop in nearly four years on Friday, amid continued weakness in the Chinese manufacturing sector and its stock markets.

China's major stock indexes collapsed more than 7% on Monday, with traders saying market disappointment over the lack of a liquidity move by the central bank during the weekend triggered a fresh selloff. Japanese equities fell over 3%.

"China has been the global cushion in the last decade or so in the face of monetary easing policies from other central banks. It was the cushion that took in all the deflationary pressure as well as providing global growth," said Lee.

"The fear right now is there's nothing to fall back on."

That worry is spurring appetite for gold, which has now rebounded nearly 8% from a 5-1/2-year low of $1,077 reached in late July.

US gold for December delivery was flat at $1,160.30 an ounce.

Worries over global growth have pared expectations of a US interest rate hike in September when Federal Reserve policymakers meet next.

Fed officials planning to lift interest rates as soon as next month have been encouraged by solid US jobs growth, but inflation holds the key to how far the Fed can go in moving rates away from zero.

Spot palladium dropped 1.3% to $594 an ounce and silver eased 0.6% to $15.21. Platinum was down 0.4% at $1,014.90.