Prices were supported in thin Asian trading as holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 5.40 tonnes to 814.12 tonnes on Friday - the first inflow since November 5.
"There seem to be subtle shifts in sentiments for more bullishness after $1,200 was broken," said Joyce Liu, an investment analyst at Phillip Futures Pte Ltd.
"However, the upside is limited due to the year-end holiday season and with prices now treading close to $1,200, a break below that level may shift market sentiment back to bearishness."
Spot gold edged up 0.02 per cent to $1,202.90 an ounce by 0744 GMT. It rose 1 per cent on Friday on short covering after losing 4 per cent in the previous th ree sessions.
Gold fell 3 per cent last week after the Fed said the U.S. economy was strong enough to scale back its massive bond-buying stimulus, winding down an era of easy money that saw gold rally to an all-time high of $1,920.30 an ounce in 2011.
The metal has fallen nearly 30 per cent this year on fears that a scale back of stimulus would hurt its inflation-hedge appeal.
The decline this year is gold's biggest fall in 32 years.
Physical demand picked up in Asia as prices fell towards $1,200 last week but not to the same level seen during earlier price drops this year.
Volumes traded on the Shanghai Gold Exchange on Monday for the 99.99 per cent purity gold contract were 14.83 tonnes, lower than Thursday's two-month peak.
Premiums edged up $2 to $18 an ounce from Friday.
Copyright: Thomson Reuters 2013
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