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Asian stocks stumbled to seven-month lows on Monday, while crude oil prices were pinned near a four-year trough. Gold is often seen as an alternative investment to riskier assets such as equities.
Spot gold rose to a near four-week high of $1 237.30 an ounce before paring some gains to trade up 0.9% at $1 234.20 at 06:44 GMT.
US gold futures jumped to $1 238, their highest since Sepember 17. Silver, platinum and palladium also gained.
Gold's first leg up on Monday came during early Asian hours when liquidity was thin. Japan, which is usually active early in the Asian day, was closed for a public holiday.
"A few stops were triggered this morning once we hit $1 225," said a precious metals trader in Hong Kong. "With the dollar and equities under pressure, and what is seen as dovish comments from Federal Reserve officials over the weekend, it looks like gold could see some more upside."
"We are expecting a move up to the $1 240-50 area, though we would be sellers there."
Concerns over the global economy have risen in the past few days after weak data from Europe and lowered global growth forecasts by the International Monetary Fund.
Fed officials also expressed concern over the global economy, which could have an impact on the timing of an eventual rise in US interest rates.
Most notably, Fed vice-chairperson Stanley Fischer said the effort to normalise US monetary policy after years of extraordinary stimulus may be hampered by the global outlook.
A delay in raising interest rates would be seen as positive for gold, a non-interest-bearing asset, and negative for the dollar.
The greenback snapped a 12-week winning streak on Friday, and remained under pressure on Monday.
"Gold is going to be doubly influenced by both the equity markets and the dollar over the course of the week. We suspect that both will continue to drop over the short term, offering a measure of support to prices," said INTL FCStone analyst Edward Meir.
"In addition, gold's technical picture looks slightly more constructive," he said.
Despite the recent gains, however, investor interest in the precious metal remains near multi-year lows.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund and a good proxy for market sentiment, fell 2.64 tonnes on Friday to 759.44 tonnes, its lowest level since December 2008.
Singapore contract
Singapore launched 25 kg gold contracts on Monday, becoming the latest Asian country to start exchange-traded contracts with the aim of providing a regional benchmark price.
The most-active contract expiring on Tuesday closed at $39.685 per gram, or $1 234.20/oz, on the Singapore Exchange.
The launch comes as Asia, home to the world's top two gold buyers - China and India - has been clamouring to gain pricing power over the metal and challenge the dominance of London and New York in trading.
China, the biggest buyer and producer, last month launched a gold exchange open to foreign players for the first time with an aim to set a yuan-denominated price benchmark. CME Group is also set to launch a physically deliverable futures contract in Hong Kong later this year.
