“Gold prices rose above $1,740 an ounce on Friday as positive German economic data and hopes that Greece's creditors are nearing an agreement to tackle its debt lifted the euro to a three-week high versus the dollar and trimmed losses in stocks.
Trade was expected to be quiet, however, with the U.S. stock market open for only a half-day of business after the Thanksgiving holiday on Thursday.
"The dollar is coming off on the back of the German data and hopes for a Greek deal, and this is supporting gold," Andrey Kryuchenkov, analyst with VTB Capital, said.
Spot gold was up 1.2 percent at around $1,748 an ounce, while U.S. gold futures were up 0.9 percent at about at $1,744 per ounce.
The metal has risen more than 1 percent this week, lifted by gains in the euro, which is set for its biggest weekly rise in seven, and worries over the U.S. "fiscal cliff," a $600 billion package of tax and spending changes set to kick in next year.
In the near term gold was set to take direction from the wider markets. It tends to benefit from dollar weakness, which makes assets priced in the U.S. unit cheaper for other currency holders, and firmer appetite for assets seen as higher risk, such as stocks and commodities.
The euro hit a three-week high against the dollar and European stocks firmed on Friday after German IFO numbers showed a surprise improvement in business sentiment, and as hopes grew that Greece would reach an agreement on its debt.
The International Monetary Fund has relaxed its debt-cutting target for Greece and only a 10 billion euros ($13 billion) gap remains to be filled for a vital aid tranche to be paid, Greece's finance minister said on Friday.
Finland's finance minister said she expected a deal to be done on Greek debt on Monday.
Dealers said on Friday that business was slow in Asia's physical gold market as rangebound prices dampened interest from both potential buyers and scrap sellers, defying expectations of a pick-up in demand during the holiday season.
Analysts and traders had expected demand to strengthen during the holiday season in the last quarter of the year, with top consumers India and China, which between them account for nearly half of global gold demand, leading the way.”