Gold prices were steady on Thursday, with buyers cautious on the physical market, as investors wait for key U.S. job data due later in the day for further clues on health of the economy.
Data released on Thursday showed a surprise rebound in pending sales of previously owned homes in July, as well as a fall in new jobless claims last week in the U.S.
But the August U.S. non-farm payroll figures due Friday, expected to show loss of 100,000 jobs, might dampen recovery hopes raised by this week's positive data and spur safe-haven demand in gold.
In case of disappointing U.S. employment data, we can see gold test the historical high of $1,265 tonight, said Louis Lok, a dealer at Bank of China in Hong Kong, adding that even though market sentiment was close to being overbought, bullion was still likely to move higher.
The Relative Strength Index, or RSI, stood at 68.065, just below the 70 level which is seen to mark an overbought market.
Despite the market's bullish sentiment, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust (GLD.P), fell for the first time in a week on Thursday with a sizable decline of 9.12 tons, the largest one-day drop since late July.
But dealers traced it to profit-taking by some fund investors. For the longer term, there is still good reason for gold to go higher, said Lok.
Spot gold was little changed at $1,249.60 an ounce by 0311 GMT, just $15 below the record high of $1,264.9 hit in June. It is heading for a weekly gain of 1.1 percent, its fifth straight week of rises.
U.S. gold futures for December delivery edged down 0.1 percent to $1,251.7.
Technical analysis showed bullion may edge up to $1,275 an ounce over the next week, indicated by an ascending channel and a big triangle, said Wang Tao, a Reuters market analyst.
(Editing by Clarence Fernandez)