Gold prices eased a touch on Friday, pressured by gains in the dollar and softer investment demand for the metal after a raft of well-received economic data boosted interest in other assets.
Prices have been choppy this week, lacking clear direction, as investors were caught between short-term negative factors like improving risk appetite, and a view that concerns over economic stability will ultimately benefit prices.
Gold is heading for its second consecutive weekly gain, however, recovering some of January's 6 percent price fall.
Spot gold was bid at $1,359.30 an ounce at 1204 GMT, against $1,362.90 late in New York on Thursday. U.S. gold futures for April delivery fell $2.50 to $1,360.00.
Richcomm Global Services analyst Pradeep Unni said better appetite for assets such as equities was keeping gold between $1,345-1,368 an ounce.
The economy is far better placed for recovery and central banks are at a stage where that they can talk of a rate hike, which they couldn't think of a year ago, he said. Interest rates in major economies have been held down for some time as governments try to nurse economies back from recession.
Consistent offloading by ETFs, who were pivotal in taking the metal beyond $1,400, and lackluster physical demand are the key bearish forces curbing sustained gains. Gold is currently in need of additional fundamental news triggers for the next move ahead, as most current factors have been already priced in.
Some support was lent to prices by the unrest in Egypt. Concerns intensified on Thursday after news reports suggested President Hosni Mubarak was on the brink of resigning.
Egyptian protesters enraged at his refusal to step down streamed into Cairo's Tahrir Square on Friday in what organizers billed as their biggest show of indignation.
While more than two weeks of protests have failed to drive gold much higher, they did lift the metal from lows on Thursday.
(Gold) remains caught in a tug-of-war of downward pressure from a stronger dollar as a result of an improved economy, and an upward push on safe-haven buying as political instability in Egypt continues, said Commerzbank in a note.
The dollar rose 0.5 percent against the euro, benefiting from well-received jobs data released the previous day and safe-haven flows linked to the Egypt protests.
Dollar strength tends to weigh on gold as it curbs the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies, though the relationship has weakened in recent years.
Investment demand for gold remained soft, with holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, easing by nearly a ton on Thursday. They are down just over 55 tons so far this year.
In the same period of 2010, they fell around 27 tons.
Premiums for gold bars were steady in Hong Kong and Singapore, with no signs of buying interest from China after the Lunar New Year celebration. There was hardly any physical buying in Asia related to unrest in Egypt, dealers said.
Australia's Newcrest Mining (NCM.AX), the world's third largest gold miner after its takeover of Lihir Gold last year, said higher metal output had helped almost double underlying first-half profit.
Silver was bid at $29.98 an ounce against $30.19.
Holdings in the world's largest silver ETF, the iShares Silver Trust, rose around 18 tons to 10,388.45 tons on Thursday, their first increase since January 24.
Platinum was at $1,827.24 an ounce against $1,824.75, while palladium was at $817.72 against $820.25.