Gold was a touch softer on Friday continued to trade near a seven-month high over $US985 marked this week as it consolidated gains before tackling new peaks.
The precious metal fell on Thursday on profit-taking sparked by worries that its recent rally had been overdone, but the bleak economic outlook is expected to keep safe-haven buying intact.
Spot gold was trading at $US972.75 an ounce in Asian trade, down about 0.1% from New York's notional close on Thursday. This compares with it's all-time high of $US1030.80 marked in March.
Gold touched $US985.95 an ounce on Thursday, marking its highest level since July 15, and was likely to try to consolidate around $US960 before heading higher, dealers said.
"I would say (the market) should be able to consolidate a little bit, it should come down a little bit, maybe around the region of $US960,'' said Beh Hsia Wah, a dealer at United Overseas Bank in Singapore.
"Everybody is looking for $US1000,'' she said.
A Hong Kong dealer said gold was showing its strength in its traditional role as an inflation hedge in the current economic climate as more money was printed to fight the recession.
"People read the newspaper ... and people are flocking to gold for the time being,'' he said.
There was little buying for jewelry demand.
"We're only seeing investment buying, that's all,'' he said.
Gold's popularity as an investment was also evident in the rise in gold exchange-traded funds.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings hit a record 1028.98 tonnes on Thursday, up 4.89 tonnes or 0.5% from the previous day.
Investment in silver ETFs has also been strong, with holdings of the world's largest, the iShares Silver Trust, jumping nearly 3% to a record 7873.75 tonnes on Wednesday.
Its holdings have risen more than 1000 tonnes, or 16%, since the start of the year.
In supply news, the world's second-largest gold producer, Newmont Mining, sees equity gold sales at 5.2 million to 5.5 million ounces in 2009, and reported adjusted earnings per share of 26 cents in the fourth quarter.
If a bleakening outlook in other markets, from equities to foreign exchange, is any indication, gold is unlikely to lose its shine for investors soon.
The latest deteriorating economic signs included Thursday's close of the US Dow industrials index at its lowest in more than six years and a fall in crude oil futures below $US39 a barrel.
The yen edged up slightly on Friday, but stayed in sight of a six-week low against the dollar and a one-month trough against the euro.
