Gold hovered just below $1,000 on Friday, taking a break after its strongest two-day performance since March as safe-haven demand stoked renewed investor buying.
Worries about the global economy and the sustainability of this summer's stock market gains have pushed bullion, traditionally a port during economic storms, up about 5 percent over the past two days to a six-month high on Thursday.
Gold is also seen as a hedge against inflation, a factor that is gaining increasing prominence as central banks keep pumping money into the financial system to jolt the economy.
Spot gold was essentially unchanged at $990.05 by 0138 GMT after touching a peak of $997.20 on Thursday.
U.S. gold futures for December delivery, now at $991.30, came even closer to four digits with a session peak of $999.50 per ounce on Thursday.
Gold had a positive correlation with stocks for the last three months, but now that there are signs of weakness in stocks, investors are turning to the metal in flight-to-quality buying, said Masayo Kondo, President of Fisco Commodity Ltd.
U.S. stocks fell for four days running before Thursday's late day rally snapped the losing streak <.N>, with U.S. retail sales in August coming in stronger than expected, even if still down 2.9 percent on the year.
The key economic number this week comes up later on Friday when U.S. non-farm payrolls data is released, with employers expected to cut jobs by the least amount in a year. [nN01485399]
Strong investment demand is also helping to fuel gold's gains.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings stood at 1,078.01 tons as of September 3, up 14.65 tons or 1.4 percent from the previous business day.
It was the second day of gains for the fund, which marked a record high of 1,134.03 tons on June 1.
(Reporting by Miho Yoshikawa; Editing by Michael Urquhart)