Gold futures in New York rose sharply for a third straight session to scale a one-week peak on Friday on the back of robust investor sentiment in spite of a dollar bounce and weaker crude oil prices.
"I think the market just tested its downside last week (and) failed to see any follow-through selling. The market generally continues to be bullish despite the pullback we saw, and bullishness is holding the market up right now," said Carlos Perez-Santalla, a Comex floor trader at Hudson River Futures in New York.
"The volume is thin today compared to recent volume, so it doesn't take much to hold the market up," he said.
At 10:00 am EST (1500 GMT), most-active December gold on the Comex division of the New York Mercantile Exchange was up $15.60 or 2.0 percent at $814.20 an ounce, trading between $798.40 and $819.20 which marked the strongest since November 15.
Comex gold and silver floor trading will close early at 12:30 pm after Thursday's US Thanksgiving holiday when the market was closed. Nymex platinum and palladium floor trading will end at 1:30 pm.
The euro set fresh record highs of $1.4966 against the dollar in overnight sessions on Friday, though the $1.50 level proved out of reach as the euro was knocked more than a cent off its peak by comments from a euro zone policymaker.
The dollar recovered after ECB Governing Council member Miguel Angel Fernandez Ordonez said he saw a stronger-than-expected slowdown in the euro zone and that there was not enough data to dispel uncertainty about the effects of financial market turmoil.
"Although the dollar is a bit firmer today, it's not firm enough to see gold to follow through," Perez-Santalla said. Gold futures have now surged as much as $46 or nearly 6 percent after hitting a bottom of $773.40 on Tuesday.
Oil fell to just above $97 a barrel on Friday, reflecting moves in the US dollar and amid signs some Opec members have been raising output ahead of their policy meeting next month.
Gold's support was weakened as it is generally seen as a hedge against inflation. Spot gold was quoted at $814.85/815.45 an ounce, compared with $799.80/800.50 in New York Wednesday afternoon. London bullion dealers fixed the morning spot reference price at $810.50.
Comex December silver was up 24 cents or 1.7 percent at $14.66 an ounce, trading between $14.395 and $14.775. Spot silver was quoted at $14.66/14.70 an ounce, compared with $14.47/14.51 late Wednesday in New York. London silver was fixed at $14.55.
Nymex January platinum was up $11.50 at $1,478.70 an ounce. Spot platinum was quoted at $1,475/1,479. December palladium slipped $3.55 or 1 percent to $354.40 an ounce. Spot palladium was at $351/355.
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