Gold prices climbed on Friday as the dollar retreated on expectations the Federal Reserve may pause interest rate hikes if the US economy slows this year, while investors awaited news on progress in the Sino-US trade talks.
Spot gold rose 0.6 per cent to $1,294.01 per ounce as at 0729 GMT, heading for a fourth straight weekly gain. The yellow metal is up 0.7 per cent so far this week.
US gold futures were up 0.5 per cent at $1,294.3 per ounce.
"The weaker dollar and a more dovish Fed are the two most alluring factors for gold," said Stephen Innes, APAC trading head at OANDA.
"There are concerns for the US economy to slow down, perhaps towards the end of 2019 and into 2020, so the markets are pricing rate cuts."
The dollar slipped against other major currencies, having rebounded on Thursday from three-month lows helped by Federal Reserve Chairman Jerome Powell's comment suggesting the central bank is not done tightening monetary policy just yet.
A partial US government shutdown extended into its 20th day and provided little comfort to the US currency, after President Donald Trump threatened on Thursday to use emergency powers to bypass US Congress to pay for a wall on the US-Mexico border.
"The (gold) market is holding back a little as they are concerned the equity market could rally significantly on trade war truce," Innes said.
Asian equities inched up to one-month highs, but the rally's momentum slowed partly as investors sought more clarity on whether the United States and China could make headways on their trade talks.
"Dilemma over the US-Sino trade dispute is still raising eyebrows and needs clarity," said Sugandha Sachdeva, vice-president - metals, energy and currency research, Religare Broking Ltd.
"Once trade issues are resolved, the dollar is likely to remain suppressed, losing its appeal as a safe haven...Gold on the other hand would benefit."
Also aiding gold's upward trend are concerns about weakening global growth, further emphasised by sombre data out of Switzerland and France on Thursday.
"Gold will need some fresh news to trigger prices to break the $1,300 level bar. $1,299 would be a critical level for further upside with mild resistance at $1,310," said Hareesh V, head of commodity research at Geojit Financial Services.
Spot gold is expected to retest a resistance at $1,299 per ounce, with a good chance of breaking above this level and rising further to $1,311, according to Reuters technical analyst Wang Tao.
Palladium climbed 0.2 per cent to $1,324.90 per ounce, and was up about 2.5 per cent for the week.
Silver rose about rose 1.1 per cent to $15.73 per ounce, while platinum was up 0.6 per cent to $824.60.