Platinum was also set for a second strong week of gains, up 5 percent and nearly 9 percent this month, after an outbreak of violence at a platinum mine in South Africa, source of around 80 percent of annual supply of the metal, saw 44 people dead.
Spot gold has risen more than 3 percent this week after minutes of the Federal Reserve's August policy meeting showed the bank is likely to deliver another round of monetary stimulus "fairly soon" unless the US economy improves considerably.
Such a move would likely benefit gold, boosting liquidity while keeping long-term interest rates low and fuelling fears of inflation further down the track. The first two rounds of US quantitative easing - money printing to buy bonds - have fuelled a doubling of gold prices in the last four years.
The news lifted gold out of the near $100 range it had held within since mid-May and above its 200-day moving average for the first time since March. Richcomm Global Services analyst Pradeep Unni called its downward dip "just a retracement."
"Having got the necessary signals from the Fed for QE3, the market is just waiting for a confirmation to spike higher," he said. "Any consecutive release of weaker than expected economic data will only add fuel to the fire.
"The gold bulls' next upside price breakout objective is to produce a close above psychological resistance at $1,700. First resistance is seen at $1,678.60, and then at $1,687.40."
Spot gold was down 0.2 percent at $1,666.49 an ounce at 1023 GMT, while US gold futures for December delivery were down $3.30 an ounce at $1,669.50.
The boost lent to assets seen as higher risk, like stocks and industrial commodities, by Wednesday's Fed minutes showed signs of petering out as investors awaited clearer signs of how strong central bank action to boost the global economy will be.
European shares, which have suffered their worst run in over a month in the last few days as worries over euro zone debt flared up, were flat but MSCI's main global index was down around a third of a percent on the day.
The euro eased against the dollar as some investors took profits on Thursday's rally to a seven-week high, while the dollar index dipped 0.2 percent.
Oil fell below $115 a barrel on Friday as signs of weakness in the global economy weighed on the demand outlook, while prices of industrial metals like copper and aluminium eased.
ETF HOLDINGS RISE
Gold investors showed good appetite for gold this week. Holdings of gold exchange-traded funds, which issue securities backed by physical metal, hit a record 71.253 million ounces, Reuters data showed on Friday, and are on track for their biggest weekly inflow in absolute terms since February, of nearly 650,000 ounces.
Holdings of the largest, New York's SPDR Gold Trust, rose by nearly 145,000 ounces on Thursday and are on track to climb for a fourth consecutive week.
Analysts are now awaiting Friday's report from the Commodity Futures Trading Commission on activity in the futures market.
"The CFTC's statistics on the market positioning of speculative financial investors - due to be published this evening after close of trading - are likely to show that it is precisely these money managers who have recently been betting on rising prices again, thereby reinforcing the price increases among precious metals," Commerzbank said in a note.
High prices curbed demand for gold in number one consumer India, however, with consumption plunging as rupee prices hit record highs. Scrap inflow also rose as gold holders took advantage of the peak to realise profits.
Other precious metals retreated along with gold, with platinum down 0.1 percent at $1,536.99 an ounce, off Thursday's near four-month high of $1,558.49 an ounce.
World number one platinum producer Anglo American Platinum said on Friday 100 workers had refused to go underground at its Thembelani mine in South Africa, a sign that simmering discontent in the sector has not been contained.
The company said later that its miners had returned to work.
Silver was down 0.3 percent at $30.42 an ounce, while spot palladium slid 1.6 percent to $639.30 an ounce.