Gold was steady above $1,010 an ounce on Friday as the dollar recovered some lost ground against the euro, denting interest in the metal as an alternative asset. But prices were well supported by strong dip buying, as investors continued to bet on a break of the metal's all-time high at $1,030.80 an ounce, set in March 2008.
Spot gold was at $1,012.30 an ounce at 1404 GMT against $1,011.45 late in New York on Thursday. Dollar weakness lifted the metal to an 18-month high of $1,023.85 that day. "(This) is more a dollar story than anything else," said Eugen Weinberg, an analyst at Commerzbank. "As long as this negative rally in the dollar continues, we will not see a trend reversal in gold."
US gold futures for December delivery on the COMEX division of the New York Mercantile Exchange firmed 40 cents to $1,013.90 an ounce. Saxo Bank senior manager Ole Hansen said given the momentum gold has built up in its run towards record highs, significant dollar strength would be needed to trigger a move lower.
"There has been a lot of buying into this - speculative longs are at a record high, ETF investments are at a record high - so we need to see the break above the highs from last year," he said. If that were achieved, he said, there was a chance gold could establish a new $1,000-$1,300 range. There was little fresh interest in gold-backed exchange traded funds, however, with holdings of the largest, New York's SPDR Gold Trust, unchanged on Thursday at 1,086.5 tonnes.
Among other precious metals, silver, platinum and palladium also edged lower after hitting multi-month highs on Thursday, tracking gains in gold. The three metals - which unlike gold are largely industrial in use - are also benefiting from an improved outlook for the global economy, which is fuelling hopes rising industrial production will cause an uptick in demand.
Palladium, which is used as a component in catalytic converters, broke through $300 an ounce for the first time since September 2008 on Thursday and hit a new one year high of $304 an ounce early on Friday. Palladium was later at $302 against $301.50 late on Thursday, while platinum was at $1,328 an ounce against $1,335.50. Silver was at $17.12 an ounce against $17.18.