Gold held steady near an all-time high on Friday after a rise in physical gold holdings supported by a weaker dollar and persistent worries about Europe's fiscal outlook.
Holdings in the world's largest bullion-backed Exchange Traded Fund rose for the first time in a week to a record as investors built up positions due to uncertainty in the global economy.
Spot gold rose as high as $1,248 an ounce in early trade, lifted by the firming euro. Gold stood at $1,243.60 an ounce at 10:28 p.m. ET, barely changed from New York's notional close on Thursday.
Silver was steady, while platinum group metals edged down alongside industrial base metals.
I would expect a little bit of volatility in the week ahead. But I don't, at this stage, see any reason why gold will sell off, certainly not below $1,200, said Darren Heathcote, head of trading at Investec Australia in Sydney.
Looking at it technically, we could be aiming toward $1,260, but on support side, probably somewhere around toward $1,225-ish.
For a graphic showing gold's technical outlook, click on: here
Gold hit an intraday high around $1,250 on Thursday, coming within sight of a record high of $1,251.20 struck June 8, when investors poured money into gold due to worries the euro zone debt crisis was spreading.
U.S. gold futures for August delivery fell $2.6 an ounce to $1,246.1 an ounce.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust (GLD.P) said its holdings rose to a record high at 1,307.963 tonnes as of June 17 from 1,306.137 tonnes on June 10.
Europe's fiscal problems are a risk that will have some effect on U.S. growth during the rest of this year and 2011, U.S. Federal Reserve vice chairman Donald Kohn said in an interview with the Wall Street Journal.
Traders said volumes were thin, making it easier to move prices.
I think the market is bit thin, so it's easy to push it up. It's the same old story, ... the euro zone is still struggling and the interest rates are low in many big nations, said a dealer in Hong Kong.
There was light physical buying yesterday but we don't hear anything now, the dealer said, referring to purchases from jewelers.
The euro held steady near three-week highs on Friday, as investors liquidated short positions after a robust response to Spanish bond auctions, while the U.S. dollar appeared vulnerable to a sell-off.
U.S. data showed a decline in the Philadelphia Federal Reserve's mid-Atlantic manufacturing index while there was a rise in first-time jobless claims.
The Nikkei edged up 0.2 percent on Friday, climbing back toward a one-month high hit earlier in the week after U.S. stocks inched higher on momentum gained after the S&P 500 index broke through its 200-day moving average. .T .N
U.S. crude futures extended losses on Friday as sluggish economic indicators raised doubts about the sustainability of a recent acceleration in demand growth by top oil consumer the United States.
(Editing by Nick Trevethan)