Gold futures rose to seven-week high on COMEX on Monday as a weaker dollar, better physical demand and fresh buying from commodity funds boosted investors' appetite for hard assets amid a Wall Street rally.

Silver future outperformed gold in terms of percentage rise. It rose by 1.27 and 2.04 percent on MCX and COMEX respectively.

Net official sector gold sales in 2009 may drop to their lowest level since 1994, after sales in the first half of the year fell 73 percent from a year earlier, metals consultancy GFMS said in a report on Monday.

The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings stood at 1,072.87 tonnes as of Aug. 3, unchanged from the previous business day.

Holiday purchases and stable prices helped gold retailers in Abu Dhabi maintain sales growth in July but the market will slow in August as the summer holiday season kicks in, traders said on Monday.

Sino Gold Mining Ltd said on Monday that it aims to boost gold production to more than 400,000 ounces by 2012. The company also aimed to cut production costs by about 25 percent to $300 per ounce by 2012, from nearly $400 per ounce at the end of 2008, it said in presentation materials.

India gold local demand turned sluggish on Monday as dealers waited for a correction in prices, even as a strong rupee lifted sentiment, dealers said.

GFMS said it saw no evidence that China undertook large-scale and direct purchases on the open market in the first few months of 2009, but said China was generally keen on increasing its reserves to diversify away from the dollar.

Despite dollar index making fresh low of 2009, precious metals didn’t move up sharply. After the redemption by Gold ETFs and weak retail demand, the upside might get capped. Silver has been outperforming gold and trend looks up for the day.