Gold rose to its highest level since early July on Monday, reprising its safe-haven properties, as gloomy Japanese economic data hit shares and stoked investor concern about the pace of global economic recovery.

Spot gold rose to $1,223.50 an ounce by 1400 GMT from $1,214.50 late in New York on Friday, having hit an intraday day high of $1,227.15 -- its highest since July 1. Bullion struck a record high around $1,264 in June.

You can consider this to be safe-haven buying. It is also supported by the overall low interest rate environment that makes gold additionally attractive to investors, said Alexander Zumpfe of Heraeus Metals.

Leading economies' maintaining low interest rates is a favorable environment for non-interest baring assets such as gold.

The market is looking technically well supported after it broke through $1,220 per ounce, he added.

Japan's economy expanded just 0.1 percent in the quarter to June, far less than analysts had expected and which diminished investor appetite for taking risks.

Asian and European equities fell after the data, while on Friday U.S. stocks closed out their worst week in six.

Safe-haven U.S. and German government bond yields hit new lows after the much weaker than expected growth numbers from Japan added to worries over a faltering global economic recovery. .N

There are jitters about the global economic recovery, but also the fact that we're trading comfortably above $1,200 is prompting some interest in the gold market, said Eugen Weinberg, an analyst at Commerzbank.

Also I would not be surprised to see more physical buying in front of the festive season in India.

Holdings were unchanged in the world's largest bullion-backed ETF, SPDR Gold Trust, suggesting that some investors were happy to hold on to bullion after recent U.S. economic data pointed to weakness in the economy.

U.S. gold futures for December delivery rose $9.00 to $1,225.40 an ounce, extending gains from Friday when weak U.S. economic data boosted the metal's safe have appeal.

CURRENCY CORRELATIONS

Gold resumed an inverse correlation with movements in the dollar, which fell against the euro and other major currencies. Recently the metal and U.S. currency had moved in the same direction due to both being perceived as safe haven assets.

Gold's ... positive correlation with the euro resumed, suggesting that the metal's place as the ultimate hedge against risk remains secure, ABN AMRO said in a note.

Especially since the outlook for the U.S. dollar remains weak as far as the eye can see, with U.S. interest rates likely to remain pinned to the floor well into 2011.

Oil prices stayed above $75. Higher oil prices are seen as triggering inflationary pressures, which are supportive for gold because the metal is seen as a hedge against inflation.

In other metals silver rose in line with gold, trading at $18.34 an ounce from $18.08 late on Friday in New York. Platinum firmed to $1,525.00 an ounce from $1,520 an ounce and palladium to $477.40 an ounce from $472.

(Additional reporting by Veronica Brown in London; Editing by William Hardy)

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