Gold ticked up a little in thin pre-holiday trade on Monday as equities regained some strength, but prices stayed near their weakest in four months as the US fiscal stalemate drove investors to the sidelines. Hedge funds and money managers slashed their net long gold positions in the week to December 18 to their lowest level since the end of August, according to the Commodity Futures Trading Commission's Commitments of Traders report on Friday.

Gold added 72 cents to $1,656.81 an ounce, having fallen to its weakest since August at $1,635.09 last week. Bullion, traditionally an inflation hedge, hit a record around $1,920 in September 2011 when a worsening debt crisis in Europe sparked a buying rush. US gold for February fell $2.30 an ounce to $1,657.80.

"We are expecting thin trading volumes due to the festivities and because of this, gold is prone to volatility. I don't to expect any surprises. I believe gold should hold above $1,625," said Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore. Silver was little changed at $30.06 an ounce, platinum rose $1.25 an ounce to $1,535.50 and sister metal palladium added $2.47 to $678.97 an ounce. Palladium is mainly used in making vehicle catalytic converters to clean engine exhaust.

Copyright Reuters, 2012