Gold gained to hold near its strongest in almost three weeks as bargain hunting helped the metal defy a rebound in the euro, waning Europe debt concerns and upbeat US data.
The European Central Bank resisted pressure on Thursday to commit to a major bond-buying program to contain the euro zone debt crisis, but traders said the ECB had been quietly buying bonds anyway.
Spot gold rose $US6.05 an ounce to $US1390.80 an ounce. It had jumped to its highest since November 12 around $US1398 on Thursday before falling back. Bullion was below a lifetime high around $US1424 struck in early November.
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"We can say there are some bargain hunters at the lower end. There's not too much liquidity in the market and a little bit of buying moves up gold," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
"I don't see many jewellery makers around these days. The price is too high. It's towards the year-end and most of the orders have already been filled," said Leung, adding that gold could find resistance around $1400.
US gold futures for February added $2.2 to $1391.5 an ounce.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings rose to 1298.447 tonnes by December 2 from 1293.891 tonnes on December 1. The holdings hit a record at 1320.436 tonnes on June 29.
Spot gold will rise to a projected target at $US1403 per ounce as the current upward wave "c" has not completed. A Fibonacci projection points to $US1403, the 100 per cent level, which may exert a strong resistance to prevent a further rebound, according to Wang Tao, who is a Reuters market analyst for commodities and energy technicals.
The euro retained its momentum on Friday, keeping gains made after talk the European Central Bank aggressively bought euro zone periphery debt, even though it avoided explicitly committing itself to ramping up bond buying.
Investors awaited the release of US payrolls data later in the day, with surprisingly strong US housing numbers adding to budding optimism on the US economy and sending equities markets higher.
Silver tracked gold higher, while palladium slipped after rallying to its highest since early 2001 on Thursday, but firmer equities and physical buying helped cushion the fall. Platinum edged up.
The world's largest silver-backed exchange-traded fund, Shares Silver Trust, said its holdings slipped to 10,778.68 tonnes by December 2 from 10,782.69 tonnes on December 1. The holdings jumped to an all-time high of 10,893.68 tonnes on November 23.
"Demand for silver from the industrial sector is slowing down, but there's a steady interest in palladium," said a dealer in Tokyo. "Platinum price is just too high. There's no interest."
Platinum and palladium often track equities because of their industrial demand, mostly in auto catalysts.
Japan's Nikkei share average hit a six-month high on Friday after a stream of positive US retail and housing data raised hopes for a swift recovery in the world's biggest economy.
