Gold prices continued to rise, reaching the highest level in almost seven weeks as the weak US dollar and the decline in global stock markets increased the appeal of the precious metal as a safe haven.

Index USD, showing against a basket of major currencies, hit five-year high with the Monday 89.53 to 88.32, down 0.8%.

A weak dollar usually boosts gold's appeal as an alternative asset and reduces the cost of dollar-denominated commodities for buyers in other currencies.

The dollar index against a basket of six major currencies reduced after the article in the Wall Street Journal, that Fed officials think seriously refuse to promise to keep interest rates near zero for a long time. The Fed could announce it at the meeting next week, the article says.

Meanwhile, in Asia, in China Shanghai Composite has fallen by more than 5%, showing the maximum session decline since August 2009, as investors closed their positions amid growing fears over the health of the Chinese economy.

European stock indexes also dramatically reduced. For example, Germany's DAX fell 1.5%, while the Spanish IBEX 35 and the Italian FTSE MIB lost nearly 2%.

Despite recent gains, gold quotes, they are likely to remain vulnerable in the short term amid signs that the strengthening of the US economic recovery may prompt the Federal Reserve to start raising interest rates sooner than expected.

Expectations of growth rates on loans put pressure on gold as a precious metal with difficulty competing with the yield of interest-earning assets at higher rates.

"Gold will be difficult to continue the rally because the increase is due mainly to cover short positions. Fundamentals speaking about economic growth have not changed, and investors are betting on a decrease in quotations, because interest rates could rise soon," - said a trader in Sydney.

The cost of the February gold futures on the COMEX today rose to 1239.0 dollars per ounce.