Gold rose 1.5 percent to above $1,210 an ounce on Friday, alongside other commodities such as copper and oil, while underlying cautiousness in the market continued to boost its safe-haven appeal.
Traders said some short-covering and momentum buying after bullion broke above the key $1,200 an ounce mark have accelerated gains, but added that they did not expect further hefty gains.
Spot gold touched $1,213.35 an ounce, its highest since July 5 and was bid at $1,211.21 an ounce at 1552 GMT, against $1,196.48 late in New York on Thursday. U.S. gold futures for August delivery firmed $13.10 to $1,209.10.
The metal has recovered after falling to its lowest since late May on Wednesday at just above $1,185 an ounce.
It's rising with the rest of the commodities sector, especially after the prices have broken $1,200 an ounce, said analyst Eugen Weinberg at Commerzbank.
U.S. crude oil futures extended gains to more than a dollar while copper rose some 2 percent.
Weinberg said earlier in the European session, bullion got a boost from risk aversion, when U.S. stock futures pointed to a flat opening. But later, Wall Street edged higher with earnings in sight. .N
The overall picture I think still points to cautiousness, which is positive for gold, said David Wilson, an analyst at Societe Generale.
On the currency markets, the euro slipped off two-month highs against the dollar, with investors taking profits ahead of the weekend as strategists said its recent rally would peter out due to lingering worries about the euro zone economy.
ETF HOLDINGS RETREAT
Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, slipped again on Thursday, dipping 0.445 tonnes to 1,316.036 tonnes.
The fund's holdings have retreated 4.4 tonnes from the record 1,320.436 tonnes they stood at in late June, as the safe haven-related inflows seen in recent months dried up.
Elsewhere, lower prices tempted some buyers back to the market, with jewelers taking advantage of gold's recent price correction to restock.
Although we have entered a seasonally weak period for gold retail demand, wholesale buyers have taken the opportunity to buy upon dips, although not aggressively, Barclays Capital said in a note.
We do expect continued investor interest in gold to drive prices higher as the year unfolds, however near term long liquidation given elevated speculative length could cap upward momentum in the seasonally softer summer months.
Silver prices firmed slightly in line with gold, bid at $18.14 an ounce against $17.89 late in New York on Thursday.
Holdings of the largest silver-backed ETF, the iShares Silver Trust, have also dropped just over 25 tonnes since the end of June to 9,151.78 tonnes.
Platinum was at $1,524.50 an ounce against $1,517, while palladium was at $453.68 against $445.50.
Buying interest overnight and in Asia has seen platinum recoup yesterday's weakness, as has palladium, said James Moore, an analyst at TheBullionDesk.com, in a note.
Short-term we expect further direction from broader industrial commodity sentiment while favorable fundamentals will provide ongoing background support, he added.
(Additional reporting by Humeyra Pamuk; Editing by Anthony Barker)