London: Gold rose to a fresh 15-month peak on Monday in holiday-thinned trade as an early retreat in the dollar drove prices higher, though it later eased back below $1,300 an ounce as the US currency pared losses.

Many Asian markets and London were closed for national holidays, dampening momentum in the precious metal, which posted its biggest weekly rally since early February last week, up more than 5%.

That was chiefly driven by weakness in the dollar, which had its worst week since 2008 versus the yen after the Bank of Japan unexpectedly opted against further monetary easing. The US currency stayed on the back foot on Monday.

Spot gold peaked at $1,303.60 an ounce, its highest since January last year, before easing to $1,295.40 by 1330 GMT, up 0.1%. US gold futures for June delivery were up $7.10 an ounce at $1,297.60.

“The dollar was the reason behind the spike up (last week), and we broke all the important levels on the upside," Afshin Nabavi, head of trading at MKS, said. “$1,285 was a huge number, and we got through $1,290 pretty easily. $1,300 is going to be a very important one."

“The dollar is very weak, especially against the yen, and the white metals all look very healthy, so maybe on the back of that gold may get a bit of a follow through," he said. “I think we’re heading for new numbers on the upside."

European shares were up 0.2%, while the dollar index , which measures the dollar against a basket of currencies, fell for a sixth session to hit an eight-month low before recovering some lost ground to trade down 0.2%.

Data on Friday showed hedge funds and money managers cut their net long position in gold futures and options in the week to last Tuesday.

“We believe that speculative financial investors have been driving the gold price up significantly of late," Commerzbank said in a note. “The same also applies to silver, platinum and palladium."

Speculators added to their bullish stance in COMEX silver for the third straight week, taking it to a record high.

Silver was down 0.3% at $17.78 an ounce, having also hit its highest since January last year at $18.01. Platinum was up 0.4% at $1,077.37 an ounce, while palladium was up 0.4% at $627.02 an ounce. Reuters