Cash gold has gained more than 1 percent this week, breaking ranks with the euro, which has fallen 0.8 percent as mounting worries about the euro zone's ability to contain the debt crisis drew some safehaven flows into gold.

Moody's cut Spain's sovereign debt rating by three notches, and economists expected Madrid to seek an international bailout soon, despite a newly approved euro zone plan to help the country's battered banks.

Weak retail and inflation data added to evidence of a slowdown in the US recovery, raising expectations for further easing by the Federal Reserve.

"Once there's evidence that the policymakers on the monetary side are going to have to release stimulus, especially with inflation coming up, we should see rising interest in gold and silver," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong.

Spot gold traded up $1.37 to $1,618.39 an ounce by 0328 GMT, after rising nearly 2 percent over the past four sessions, its longest winning streak since late April.

The US gold futures contract for August delivery was little changed at $1,619.70.

Investors will be closely watching the outcome of the Greek election on Sunday, which may decide whether Greece will exit the euro zone.

The inverse correlation between gold and the dollar stood at -0.275, close to an eight-month high of -0.236 hit last week. A reading of -1 suggests perfect inverse correlation, that is, gold and the dollar move in opposite directions.

Gold bar premiums in Singapore and Hong Kong edged lower from last week, as demand remained sluggish while higher prices teased out some selling, dealers said.

"June is a quiet month for jewellers' demand, while investors are only buying on dips," said Dick Poon, manager of precious metals at Heraeus in Hong Kong, adding that investors saw $1,550 as a good bargain-hunting level.

In Hong Kong, premiums stood in the range of $1 to $1.40 an ounce, down from $1.10 to $1.60 last week, dealers said.