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Gold prices were near their highest in four months on Thursday as a dip in global stocks and recent gains in commodity prices encouraged investors to hold bullion as insurance against a stock market correction and rising inflation.

Spot gold was up 0.2 percent at $1,319.77 an ounce at 1301 GMT after touching $1,326.56 on Wednesday, the highest since Sept. 15.

U.S. gold futures were 0.1 percent higher at $1,320 an ounce.

Gold has rallied by more than $80 since a low in mid-December, helped by a weakening of the dollar that has made bullion cheaper for holders of other currencies.

It was boosted on Wednesday after a Bloomberg News report that China would slow or stop U.S. bond purchases pushed the dollar sharply lower against the yen and raised speculation that China could buy gold.

The dollar however recouped some losses on Thursday after China’s regulator dismissed the Bloomberg report.

Gold prices will struggle to rise much further in the short term, said Saxo Bank analyst Ole Hansen.

“We see gold higher this year but after a $80 rally from the December low it really is in need of a correction to test the strength of this move,” he said.

Several factors were supporting prices, including a dip in global stock markets this week following a spectacular rally.

“A highly-anticipated stock market correction is providing support on dips which continues to support the bullish gold narrative,” said Oanda trader Stephen Innes.

“Rising oil prices and strong global growth also suggest gold will remain supported as investors look for inflation protection,” he said.

Oil prices were near three-year highs on Thursday and industrial metals such as copper and aluminum were close to multi-year peaks, driving up the cost of goods and services.

Demand for gold in China would also be strong ahead of the Chinese Lunar New year holiday beginning on Feb. 15, said MKS PAMP trader Alex Thorndike.

“As Chinese seasonal buying picks up, the down-side should remain supported into February. We feel that a $1,300-1,335 range should hold or the short term,” he said in a note.

On the technical side, fibonacci resistance was at $1,329 and support was at $1,311.40 with momentum indicators suggesting prices could rise further, analysts at ScotiaMocatta said in a note.

Among other precious metals, spot silver was up 0.3 percent at $16.99 an ounce from a two week low of $16.86 on Wednesday.

Platinum was 0.8 percent higher at $978.80 an ounce after touching $979.10, the highest since Sept. 15.

Palladium was 0.4 percent lower at $1,079.20, down from a record high of $1,111.40 on Tuesday.