Spot gold prices jumped more than 1 percent on Thursday, with technical buying a strengthening euro and hopes for a Fed stimulus to the US economy cited as driving a late-morning recovery in bullion, which had declined in early trade.
Spot gold was up 1.05 percent at $1,674.86 per oz at 12:37 p.m. EDT (1637 GMT), headed for its largest weekly gain in six weeks as investors have grown more risk averse. Confidence in the euro-zone economic recovery took a knock this week amid concerns mounting about Spain and Italy.
Gold futures for June on Comex were up $20 an ounce at $1,680.30.
Bullion, which had risen as high as $1,675.31, was still within its recent trading range. Traders said they expected it to hit resistance around $1,685 per oz.
One trader said the rebound from early losses was technically driven after gold hit an intraday low of $1,650 per oz, rather than due to any economic data.
Technical buy stops over $1,665 per oz could be behind the rise, George Gero, senior vice president of RBC Wealth Management, said.
"It's good that gold has bounced back up. I don't expect sustained losses, but neither do I expect sustained gains, because tomorrow you have Chinese GDP data but you also have US inflation and that is going to be closely watched," VTB Capital analyst Andrey Kryuchenkov said.
Economists polled by Reuters expect inflation data due on Friday to show the core rate of consumer inflation, which excludes food and energy prices, to have risen by 2.2 percent in March.
Chinese growth figures for the first quarter of the year are due on Friday, and economists surveyed by Reuters expect to see a rise of 8.3 percent, compared with an 8.9 percent increase in the previous three months.
Gold in euro terms was down 0.2 percent at 1,261.59 euros an ounce, but appeared headed for a weekly gain of nearly 1 percent.
Spot silver, which has fallen in six out of the last seven weeks, was up 2.7 percent at $32.39 an ounce.
The gold/silver ratio, which measures the number of ounces of silver needed to buy one ounce of gold, held around 52.5, having risen from closer to 50 a week ago, denoting the outperformance of gold.
Platinum rose 1.28 percent on the day to $1,597.24 an ounce, while palladium was up 2.13 percent at $643.97 an ounce.
The platinum group metals were unruffled by reports of South African PGM output nearly halving year-on-year in February, largely because of a stoppage at Impala Platinum's Rustenburg mine through an illegal strike.