SINGAPORE: Gold inched higher on Friday in thin trade, taking cues from higher equities after upbeat US economic data encouraged investors, while the persistent gloom hanging over the euro zone weighed on sentiment.
Data showing a drop in US jobless claims encouraged modest gains in equities and commodities. The euro traded steady, on track to end the year slightly lower against the dollar.
Concerns about the euro zone debt crisis kept investors on edge. Spanish and Italian bond yields crept higher on Thursday, even as Italy's Senate passed a vote of confidence in the government of Prime Minister Mario Monti that put a final seal on an emergency austerity budget.
Spot gold edged up 0.4 percent to $1,611.96 an ounce by 0254 GMT. It was on course for a weekly rise of nearly 1 percent, snapping two weeks of consecutive losses.
US gold inched up 0.2 percent to $1,613.90, headed for a weekly gain of 1 percent.
Technical signals were mixed for spot gold as it is trapped in the range of $1,597 and $1,618, and a move outside the range will indicate its next direction, said Reuters market analyst Wang Tao.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 1 percent from a day earlier to 1,254.57 tonnes, the lowest since early November.
The ETF saw an outflow of more than 25 tonnes in the past two sessions, nearly half of its outflow so far this month.
"It's the year-end redemption," said Ong Yi Ling, an analyst at Phillip Futures. "Even though gold suffered sharp declines recently, the price is still up more than 10 percent this year, so some investors are cashing in the profit."
Trading volumes were thin as many have closed positions ahead of the year end. Prices could move higher in the next month or two as investors return to the market after the year-end holidays.
"Some investors will start building positions as current prices are considered low, once we see a rebound in liquidity," said a Shanghai-based silver trader.
Spot silver rose 0.6 percent to $29.27 an ounce, but was on course for a 1.5-percent weekly decline and a monthly loss of more than 10 percent.
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