Gold hit a three-week high in Asia on Friday and was on track for a second straight weekly gain as the dollar tumbled to a 13-month low. A near 2 percent rise in the euro this week pinned the dollar to multi-month lows against a trade-weighted basket of its rivals.
The euro rose to its highest since August 2015 in early European trade on Friday as the single currency's bounce prompted some investors to cover short positions. It climbed 0.3 percent to $1.16650 as markets bet the European Central Bank would tweak its policy stimulus in the autumn.
"The dollar weakness should continue to support gold around current levels and we look to a break through the 100- and 50-day moving averages as a pivot point for further gains," MKS PAMP trader Sam Laughlin said in a note. Spot gold was up 0.2 percent at $1,247.17 per ounce as of 0732 GMT, after hitting its highest since June 29 at $1,248.30. It has gained about 1.5 percent so far this week.
US gold futures for August delivery rose 0.1 percent to $1,246.50 per ounce. Spot gold may test a resistance at $1,250 per ounce, a break above which could lead to a further gain to $1,261, according to Reuters technical analyst Wang Tao.
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