Gold bullion breached a $425 resistance level in Friday afternoon trade in Europe after US data, which showed economic recovery had not yet led to sustained jobs growth, sent the dollar plunging to record lows against the euro, analysts said.
But they said prices, which at one stage reached $426.35 per ounce, were still trading within a range below a 15-year high reached on Tuesday and were not yet ready to scale such heights again.
The fortunes of spot gold have been inextricably linked to the gyrations of the dollar. Tuesday's $430.50 high was reached after the dollar fell to $1.2812 against the euro.
That lifetime low was beaten today as the euro strengthened to more than $1.2850, when data showed the number of workers on US payrolls outside the farm sector rose by just 1,000 in December and not 130,000 as economists expected.
"The dollar weakened on the US numbers and, no surprise, gold staged a recovery. But I've seen no significant business from any sector - this is just dealer action," analyst Peter Hillyard of the ANZ Investment Bank said.
Spot silver also benefited from the depressed dollar, reaching $6.39 an ounce, a 5-1/2-year high.
"People feel that gold is a pretty high number and there's more potential in silver. There's probably a bit more in it," a London-based analyst said.
Analysts said they expected gold to soar higher in the longer term, and saw the trading of the past three days as healthy consolidation.
"Gold appears to be settling down after the fireworks seen earlier in the week. The RSI (Relative Strength Indicator) at 72.7 is no longer in overbought territory," a ScotiaMocatta daily report said.
Occasional dips below $420 have been brief as investors take the opportunity to buy into the market driven by the dollar weakness, analysts said.
"We note that Barclays technical analysis highlights the importance of the euro to hold above ($)1.27 in order to avoid another retracement," a daily note from Barclays Capital said.
By 1710 GMT spot gold traded at $424.60/425.35, up on New York's Thursday closing of $423.85/424.55. The euro was strong at $1.2851/55, beating Tuesday's peak of $1.2812.
Silver traded at $6.36/6.38, more than 10 cents up from the last New York quoted price of $6.22/6.24.
Platinum, which this week has been edging towards 23-year highs, stood at $850.00/854.00, a touch down from New York's $851.00/856.00 closing price. Palladium traded at $201.00/206.00 compared with New York's $197/202.