Gold edged towards a seven-week high on Thursday as a plunge in global equities and sell-off in the dollar burnished the metal's safe-haven appeal.

Spot gold had risen 0.2 percent to $1,229.30 an ounce by 0034 GMT, not far from a seven-week high of $1,238.20 reached earlier this week.

U.S. and European equity markets fell on Wednesday as investors, worried about the Greek and Chinese economies, withdrew from riskier positions. Weak Chinese economic data dragged on appetite for stocks, along with Greece's decision to bring forward a presidential vote that heightened uncertainty over the country's transition out of its IMF/EU bailout.

The dollar index fell for a fourth session in a row on Thursday.

Gold is seen as an alternative investment to riskier assets such as equities. Weakness in the greenback also makes dollar-denominated bullion more attractive.

An improvement in sentiment was seen in the holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund. The fund saw inflows of nearly 3 tons on Wednesday, bringing total holdings to 724.80 tons.

That was the fund's second straight day of inflows after holdings fell to six-year lows earlier this month.

Investors were also keeping a close eye on oil prices, which were near five-year lows. Gold tends to fall in tandem with oil as weaker energy prices dull the metal's appeal as a hedge against oil-led inflation.