Spot gold was steady above the $680/oz level on Monday afternoon, supported by the higher oil price. Traders said that a move to the key $700/oz level was on the cards, although some consolidation might first be necessary.

At 2.50pm, spot gold was quoted at $684.75 a troy ounce from Friday's close of $681.80/oz, while the euro was quoted at $1.3162 from $1.3166.

The near-dated Brent contract was quoted at $61.31 a barrel from a previous $60.88.

"It has been a very quiet day on gold," a Johannesburg-based trader said. "Gold has been supported by the higher oil price, but there has really been no movement."

Tensions heat up oil

He continued that oil had popped over the $60 a barrel mark on fears about the situation in Iran.

"Iran is in part contributing to gold directly, but certainly oil is supportive," he commented.

Iran on Monday rejected as "illegitimate and illogical" Western demands that it suspend sensitive nuclear activities as world powers met in London to discuss the atomic standoff, AFX reported.

Gold bound to hit $700/oz

Looking ahead, the trader said that gold was definitely eyeing the $700/oz level. However, it would probably need some consolidation before its push to $700/oz.

Platinum was quoted at $1240/oz from a previous $1230.50/oz, while palladium was quoted at $354.50/oz from Friday's 351/oz.