Gold climbed 2 percent to a one-week high on Friday, in tandem with a stronger euro, after robust eurozone economic data dented the dollar's appeal and made bullion cheaper for non-US investors. The euro hit a two-week high against the dollar. It later pared gains after stronger-than-expected US housing data and positive comments on the economy by Federal Reserve Chairman Ben Bernanke.
Spot gold rose as high as $957.65 an ounce, its highest since August 14 and was at $954.65 an ounce by 1445 GMT, versus $939.35 quoted late in New York on Thursday. But the upside looked capped for bullion in the absence of physical demand and analysts said the struggle to break out of recent ranges could well result in downside capitulation, before another attempt to break above psychological resistance at $1,000.
"There isn't really the driving force of physical demand from either the jewellery sector or from the investment sector...to help carry the price higher," said Tom Kendall, precious metals strategist at Mitsubishi Corp.
On the macro front, a provisional purchasing managers' poll revealed the decline in the eurozone's dominant services sector almost came to a halt in August and businesses' expectations for the future soared to their highest level in more than two years. Asia-based traders said the absence of demand for gold jewellery, as demonstrated by falling imports in India, was a factor weighing on the spot market.
India's July gold imports fell two-thirds from a year earlier as high prices dented demand in one of the world's top markets where gold jewellery is often given as gifts during festival seasons or at weddings, a trade body said this week.
"Gold is a luxury item but in this day and age money is going where it is needed ... and a prime example of that happening is in India," said Kazuhiko Saito, chief analyst at Tokyo's Fujitomi Co Ltd. The SPDR Gold Trust, the world's largest, said its holdings held steady at 1,065.49 tonnes as of August 20, unchanged for almost two weeks and down 68.54 tonnes from a record marked on June 1.
In other metals, platinum firmed to $1,249.00 an ounce from $1,236.50 an ounce after Impala Platinum, the world's second-biggest platinum producer, said on Friday it would meet South Africa's miners' union on Saturday in a bid to avert a strike planned for Monday. Silver rose over 2 percent to $14.21, following gold and base metals, while palladium gained nearly 2 percent to $277 an ounce.