MONTREAL (Reuters) - Canada's gold stocks may glitter in the weeks ahead if jittery investors seek a safe haven in producers of the precious metal.

The S&P/TSX global gold index closed the last week at 278.84, down slightly from 279.36 the previous week, but almost 10 percent above its year low of 254.04.

Spot gold edged higher last Friday to $673 an ounce, as traders said buying interest turned toward the metal. Friday's price was about $100, or 18 percent, above its mid-October low.

The rationale behind drilling into gold stocks stems from global economic trends including inflation, swings in currency and stock markets as well as fundamentals in the gold sector.

Nervous investors tend to flock to safe-haven investments such as gold bullion during stock market selloffs and when the US dollar declines.

Speculation that the US Federal Reserve could lower interest rates even as central banks in Europe and Japan head the other way could pressure the greenback further.

That may drive investors deeper into gold bullion, but also into gold stocks, which have underperformed lately and where profits are boosted by higher prices and production.

Those already invested in mining may follow recommendations to favor gold over base metals stocks, some of which have been lifted by takeover premiums in the global frenzy for assets.

CIBC World Markets is trimming the extent of its overweight position in metals, ex-gold, by a percentage point.

"Gold shares have performed better in the last month. We remain modestly overweight the sector given the positive ramifications of expected further declines in the greenback for bullion," wrote Avery Shenfeld, senior economist, in CIBC's Canadian Portfolio Strategy Outlook.

As for the fundamentals of the gold sector itself, there has been little significant supply coming on stream in the last year, and no big discoveries unveiled. That could buoy gold prices.

Cash costs of production have also risen, pushed mainly by soaring energy prices.