Gold (GC-FT1,141.0014.801.31%) prices rose above $1,140 (U.S.) per ounce in Europe on Friday, moving further away from near-four week lows hit recently, as buyers stepped tentatively into the market with support from a weaker dollar.
Many investors had parked on the sidelines ahead of year-end after a sharp correction from record highs last week at $1,226.10 per ounce, analysts said. Most anticipate fresh buying will kick in once the new year gets under way.
Spot gold was bid at $1,141.15 an ounce at 1120 GMT, against $1,130.15 late in New York on Thursday. U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange rose $16.40 to $1,142.60.
“We are in for more gains at the start of next year, but at the moment, speculators will take a step back, and look at the dollar,” said VTB Capital analyst Andrey Kryuchenkov.
“We are maybe going to stay in this range of $1,120-1,160 until the end of the year, and then see more sustained gains.”
The euro firmed against the dollar, rising to $1.4760 from $1.4734 late in New York on Wednesday.
Traders are eyeing key U.S. data due later in the session, including November retail sales numbers at 1330 GMT and the University of Michigan consumer sentiment index for December at 1455 GMT, for clues as to the future direction of trade.
Any further losses in the dollar could benefit gold. Weakness in the U.S. unit boosts the precious metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
Among other commodities, oil prices also edged up 0.8 per cent to above $71 a barrel. Gold tends to track crude prices, as the metal can be bought as a hedge against oil-led inflation.
Elsewhere a source at the Russian state repository Gokhran said on Friday it is likely to sell 30 tonnes of gold to the country's central bank next week. Traders say central bank interest in gold as a reserve asset is growing.
Chinese Output Climbs
On the physical side of the market, premiums for gold bars firmed in Asia after gold retreated from record highs, while higher Indian jewellery during the wedding season helped offset scrap sales from other Asian holders, dealers said.
China's Ministry of Industry and Information Technology said on Friday the country produced 26.354 tonnes of gold in October. Gold output in the first 10 months rose 14.1 per cent to 254.552 tonnes, it added.
China is the world's main gold producer, and is set to take over from India as the biggest bullion consumer this year as well, according to the World Gold Council.
On the investment side, the world's largest gold exchange-traded fund, the SPDR Gold Trust, said its holdings held steady on Thursday after seeing their biggest outflow since July earlier this week.
Among other precious metals, silver was at $17.56 an ounce against $17.37, platinum was at $1,444.50 an ounce against $1,422 and palladium at $365.50 against $362.50.
James Moore, an analyst at TheBullionDesk.com, said he expects to see further gains the platinum group metals.
“Further chart support around $1,390-1,410 and $358/353 is expected in the coming sessions, with the longer-term outlook still upbeat as recovering auto and industrial sales are set to increase metal demand,” he said.
ETF Securities said holdings of its ETFS Physical Palladium exchange-traded product, which gives investors in its securities exposure to the spot palladium price, rose to a record 650,273 ounces on Thursday.
Prices of fellow platinum group metal rhodium continued to correct on Friday after rising to 13-month highs at $2,750 an ounce at the end of November. They have since declined 23 per cent to $2,125 an ounce.
