The European Central Bank resisted pressure on Thursday to commit to a major bond-buying programme to contain the euro zone debt crisis, but traders said the ECB had been quietly
buying bonds anyway.
Spot gold rose $5.50 an ounce to $1,390.25 by 0447 GMT. It had jumped to its highest since Nov 12 around $1,398 on Thursday before falling back. Bullion was below a lifetime high around $1,424 struck in early November.
"We can say there are some bargain hunters at the lower end. There's not too much liquidity in the market and a little bit of buying moves up gold," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
"I don't see many jewellery makers around these days. The price is too high. It's towards the year-end and most of the orders have already been filled," said Leung, adding that gold
could find resistance around $1,400.
U.S. gold futures for February added $2.2 to $1,391.5 an ounce.
Silver tracked gold higher, while palladium slipped after rallying to its highest since early 2001 on Thursday, but firmer equities and physical buying helped cushion the fall. Platinum barely changed.
Metals consultancy GFMS forecasts silver prices to average around $30 an ounce in 2011, peaking at $35, while gold would peak at around $1,600 to $1,650 an ounce, and average $1,400. It expects global platinum market to see a surplus of about 25 tonnes in 2010, which will continue to pressure prices.
Spot gold will rise to a projected target at $1,403 per ounce as the current upward wave "c" has not completed. A Fibonacci projection points to $1,403, the 100 percent level, which may exert a strong resistance to prevent a further rebound, according to Wang Tao, who is a Reuters market analyst for commodities and energy technicals.
The euro's rebound from a 2-1/2-month low stalled on Friday, though it retained most gains made after talk of European Central Bank buying of euro zone periphery debt helped knocked down those yields.
Invetors awaited the release of U.S. payrolls data later in the day, with surprisingly strong U.S. housing numbers adding to budding optimism on the U.S. economy and sending equities markets higher.
"Demand for silver from the industrial sector is slowing down, but there's a steady interest in palladium," said a dealer in Tokyo. "Platinum price is just too high. There's no interest."
Platinum and palladium often track equities because of their industrial demand, mostly in auto catalysts.
Japan's Nikkei share average hit a six-month high on Friday after a stream of positive U.S. retail and housing data raised hopes for a swift recovery in the world's biggest economy.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust , said its holdings rose to 1,298.447 tonnes by Dec 2 from 1,293.891 tonnes on Dec 1. The holdings hit a record at 1,320.436 tonnes on June 29.
The world's largest silver-backed exchange-traded fund, Shares Silver Trust , said its holdings slipped to 10,778.68 tonnes by Dec 2 from 10,782.69 tonnes on Dec 1. The holdings jumped to an all-time high of 10,893.68 tonnes on Nov 23.