TOKYO (Reuters) - Spot gold hit a record high above $1,130 an ounce on Monday with investors cautiously preparing for the precious metal to advance towards the psychologically important $1,200 level as the U.S. dollar is expected to remain weak for now.

Investors maintained their appetite for bullion as a hedge against currencies as the greenback drifted lower in Asia and the euro edged up as rhetoric over China's yuan currency policy increased.

The United States and China sparred over exchange rates at a meeting of Asia Pacific leaders on Sunday, a move that quashed expectations that China may allow the yuan scope to rise in coordination with U.S. President Barack Obama's first trip to Beijing.

Spot gold was at $1,128.20 an ounce at 6:24 a.m., up 0.9 percent from New York's notional close of $1,118.50. It earlier rose as high as $1,130.25, an all-time high.

Gold has pierced record highs for 7 days out of the past 10 sessions, during which it has risen more than 6 percent. The previous record was $1,122.85 marked on Thursday.

U.S. gold futures for December delivery stood at $1,129.20 an ounce, up 1.1 percent from Friday's settlement. The contract had reached a new record high of $1,130.60.

The current uptrend looks sustainable because the market has not felt the "real euphoria" of a daily price jump of more than 3 percent, said Koichiro Kamei, managing director at financial research firm Market Strategy Institute in Tokyo

"The yellow light has been on but no red light has been seen on the current course to the $1,200 target since gold broke through above $1,000 in September," he said.

Volatility in gold prices is expected to stay relatively high in coming days as substantial amounts of open positions remain in U.S. December gold futures call options with a strike price of $1,200, whose expiry is due next week.

Buying call options has been one strategy for gaining exposure to gold.

A rise above $1,150 in U.S. gold futures could bolster further options-related buying, analysts said.

Yuichi Ikemizu, Tokyo branch manager for Standard Bank, said buy orders placed soon after Asia's opening for December gold futures at $1,127.90 per ounce were in substantial lots.

"The existence of bullish players who bought in such an aggressive manner itself showed how strong the market's momentum is," he said.

News on Monday that commodities funds manager Blackrock Investment (BLK.N) expected central banks to be net gold buyers in 2009 also helped gold's rise, now that the precious metal is more sensitive to bullish news than bearish news, traders said.

Focus is also on how strong scrap gold selling was in the last quarter in an industry report by the World Gold Council due later this week as gold now has fewer sellers, Market Strategy Institute's Kamei said.

"If the Gold Demand Trends report shows a drop in scrap selling in July-September from the previous quarter, that would be a surprise and further push up the market," Kamei said.

In the currency market, the dollar index .DXY fell 0.4 percent to 75.042. It had fallen on Friday after data showed a wider U.S. trade deficit and weaker consumer sentiment.

The dollar was slightly softer against the yen after data showed the Japanese economy grew 1.2 percent in the third quarter, nearly double forecasts, but that was partly due to stimulus that the previous government enacted.

Underlining views that a global economic imbalance is being reflected in the weakening dollar, the head of the International Monetary Fund said a stronger Chinese yuan is part of the reforms that Beijing needs to implement to increase domestic consumption.

Spot platinum tracked gold's gains and rose 0.8 percent to $1,401.50 an ounce from New York's notional close of $1,390. It earlier hit a 14-month high of $1,403.50.

On Friday platinum broke through above $1,390 for the first time since September 2008 after news that South Africa's Impala Platinum Holdings (IMPJ.J) forecast output from Rustenburg, its main mining area, would fall by 100,000 ounces this financial year to 850,000 ounces, due to closures over safety and a two-week strike.

Impala Platinum is the world's No. 2 producer of the metal used to clean vehicle exhaust fumes and make jewellery.

Spot silver was up 1.3 percent at $17.62 per ounce.

Underling the metal's firmness, holdings by the world's largest silver-backed exchange-traded fund hit record levels for the second straight day on Friday.

The iShares Silver Trust said its bullion holdings rose 30.56 tonnes, or 0.3 percent, to a record 8,954.08 tonnes as of November 13 from the previous business day.

But interest from long-term investors in gold-backed securities was relatively low.

The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said its holdings fell 0.61 tonnes to 1,113.833 tonnes on Friday.

This marked the first fall since November 5.

(Editing by Joseph Radford)