COMEX gold rallied after a slow start on Friday, brushing off an increase in the dollar and instead keying off of a rebound in oil prices, traders said.
"Oil has been the big news recently and it's been driving a lot of the other markets. Similarly, when gold was up, we were driving a lot of the other markets. It's a matter of who's making the big news right now, and that's the one people are following," said one New York gold dealer.
December delivery gold was up $8.20 at $654.20 on the New York Mercantile Exchange's COMEX division, with range that ran up to $655.0 from a low at $645.10 high.
A day earlier, a steep decline in oil prices pulled gold futures down more than $20 when Britain announced that it had disrupted a plot to bomb airliners en route to the US.
Investors were concerned that air travel, and therefore demand for jet fuel, would decline on the news.
Traders said volume was very light, with COMEX estimating about 10,000 lots had traded by 10 am EDT (1400 GMT). and was therefore holding within a wide range in volatile trade.
"Gold is consolidating. The volatility has driven many people to the sidelines along with the summer lull. The players have been dealers and funds. It's more technically driven than anything. But once it breaks the range between $635 to $655, we'll get more movement," said one trader.
A technical trader said the 10-day moving average on spot gold stood at $644.08 an ounce, and remains an upside target. Spot gold increased to $642.05/642.80 an ounce, up from $634.80/635.55 an ounce by late New York on Thursday.
The dollar's gains, meanwhile were mostly ignored. The dollar charged up when US July retail sales jumped 1.4 percent, after a 0.4 percent decline in June, well above the 0.8 percent increase forecast by analysts. Excluding autos, sales were still up 1.0 percent for July.
The dollar extended gains on Friday after the US retail sales report beat expectations and renewed the possibility that the Federal Reserve might return to credit tightening policy. COMEX September silver jumped 23.50 cents to $12.34 an ounce. Its range ran from $12.05 to a high at $12.39.
Thursday's early bullion fix in London rose to $641.55. Spot silver shot up to $12.30/12.38 an ounce, from $12.04/12.14 an ounce in late Thursday trade in New York. Silver was fixed on Thursday at $12.2750 an ounce. NYMEX October platinum rose $8.0 to $1,258.50 an ounce. Spot platinum was quoted higher at $1,246/1,252 an ounce. September palladium gained $1.75 to $324.50 an ounce. Spot palladium was even at $319/324 an ounce.