(March 31): Gold was on track for a 8.2 percent quarterly rise on Friday, its best quarter in a year, as uncertainty over US President Donald Trump's tax and investment plans and a series of elections in Europe fuelled demand for bullion as a safe haven.
Spot gold was up 0.2 percent at US$1,245.56 an ounce at 1429 GMT. US gold futures were 0.1 percent higher at US$1,246 an ounce.
Though well ahead on a quarterly basis, gold fell 0.7 percent on Thursday, its biggest one-day drop in more than three weeks, after a failure to break resistance at its 200-day moving average triggered technical selling.
It was on track to end the week up 0.2 percent.
"In the short term, factors including a strengthening dollar could pull prices down to around US$1,230 an ounce," said Yuichi Ikemizu, head of commodity trading at Standard Bank in Tokyo.
The dollar was on course for its best week this year, helped by better than expected US economic growth data.
Data showing the largest annual increase in US inflation in nearly five years and comments by the president of the New York Federal Reserve meanwhile reinforced expectations of US interest rate hikes this year.
A stronger dollar makes bullion more expensive for holders of other currencies, while higher interest rates lead to higher bond yields and dampen demand for non-yielding gold.
But gold is underpinned in the coming months by doubts over Trump's ability to enact tax cuts and investment spending and an uncertain political outlook in Europe.
"The fear trade has driven the market so far this year," said David Govett at Marex Spectron.
The buying as a haven from risk, plus a recovery in Indian buying, are likely to push prices to an average US$1,259 an ounce this year, GFMS analysts at Thomson Reuters said in their Gold Survey 2017, published on Friday.
A failure by Trump to make progress on his stimulus plans would reduce the chances of a rise in US interest rates in June, Tom Kendall at ICBC Standard Bank said in a note.
"That in turn would likely give gold the impetus to break up through US$1,300 again," he said.
In other precious metals, spot silver was up 0.5 percent at US$18.18 an ounce, taking its gains this quarter to 14.1 percent.
Platinum was 0.4 percent higher at US$946.50 an ounce and is up 5.2 percent this year.
Palladium was up 0.4 percent at US$797.22 an ounce. The metal used in catalytic converters that curb pollution from vehicle exhausts has risen 17.7 percent this quarter.