Gold hit a six-month high on Friday, extending gains after the US Federal Reserve unleashed a long-awaited stimulus programme, and some analysts expected the market now to take a breather before tackling further milestones.
Bullion's rise was comparatively modest after it jumped 2 percent on Thursday and a total of 10 percent over the past month, largely in anticipation of the easing move by the US central bank.
On Thursday, the Fed launched an open-ended mortgage debt buying programme and pledged to keep interest rates near zero until at least mid-2015.
Silver, platinum and palladium, widely used in industrial applications, also climbed to their highest in about six months, as the appetite for riskier assets rose after the Fed move.
Spot gold added 0.3 percent to $1,773.59 an ounce by 16:20 SA time after climbing to an intraday peak of $1,777.51, its highest since Feb. 29.
“After the move we had, not just yesterday but over the last two or three weeks, I think it would be natural to look for a period of consolidation,” said Tom Kendall, an analyst at Credit Suisse in London.
“But certainly going into the back end of this year, I would be looking for gold to be getting towards at least the $1,850 level.”
Analyst Michael Widmer at Bank of America Merrill Lynch was more bullish, telling Reuters Insider television he expected gold to break through its previous record peak of $1,920 from last September and surge to $2,000 by the end of the year.
Cash gold is on course for a 2 percent gain this week - a fourth week of consecutive rises, as investors have been encouraged by central banks' latest push to promote global growth by effectively printing more cash.
Gold is due to encounter stiff resistance at $1790.75-$1,802.93, the February and November highs, said Edel Tully at UBS. “We expect a corrective phase around this area to unwind the over-extended upside conditions,” she said in a note.
The rally so far has been fuelled largely by institutional and hedge fund buying, but the key to keeping momentum going in the gold price will be a revival of physical buying from India and China, Kendall added.
Chinese buying of gold jewellery, coins and bars fell for the first time in more than five years in the second quarter of 2012, metals consultancy GFMS said earlier this month.
Demand from India has also been weak, falling by a third in the first half.
Holdings of SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, inched up 0.2 percent on the day to 1,292.432 tonnes by Sept. 13.
The dollar index dropped to a four-month low, helping attract gold buyers holding other currencies.
PLATINUM, PALLADIUM, SILVER HIT MULTI-MONTH HIGHS
Spot platinum jumped more than 2 percent to a six-month high of $1,713 an ounce, before paring gains to $1,705.74, as concerns about supply deepened due to labour unrest in top producer South Africa's mining sector.
Striking miners rejected an offer by Lonmin to increase their pay to less than half their demanded basic wage.
Separately, South African police fired tear gas to disperse striking miners outside an Aquarius Platinum mine near Rustenburg, north-west of Johannesburg, local station Talk Radio 702 said.
Platinum is headed for a 8-percent rise on the week, its biggest weekly gain since last October. The gold-platinum spread narrowed to under $70 an ounce, a level unseen since April, as platinum outperformed gold in recent weeks.
Spot palladium struck a near six-month high of $701.25, before settling back to $697.60, still up on the day. The metal was poised for its 11th straight session of gains, its longest winning streak since at least 1984.
Silver rose to a six-month high of $34.92 an ounce, before easing to $34.27, down 0.7 percent. It was headed for a 2.5 percent weekly rise, extending its winning streak to a fourth week.
“Silver is poised to test the next resistance level at $35.4,” said a Shanghai-based trader. The recent rally, which has lifted silver by about 25 percent over the past month, is suppressing short-term physical demand, he added. - Reuters