Gold steadies near nine-month peak, on track for second weekly gain

Gold steadied on Friday after hitting a nine-month peak in the previous session, as the market awaited US jobs data for indications on the strength of the world's biggest economy.

A more dovish US Federal Reserve outlook and a weaker dollar had lifted gold on Thursday, although it later steadied as optimism about US-China trade talks lifted appetite for riskier assets.

Still, the precious metal remained on track for its second straight weekly gain and weak Chinese factory data lent support.

Spot gold was little changed at $1,321.04 per ounce at 1244 GMT, not far from Thursday's peak of $1,326.30, its highest since April 26.

US gold futures rose 0.1 percent to $1,320.10.

"We're seeing some buying fatigue starting to emerge. The strong rally we have seen in riskier assets has to a certain extent reduced the need for additional gold buying," Saxo Bank analyst Ole Hansen said.

"We also reached the technical level around $1,325, which has over the last year provided both support and resistance, and therefore has been taken as a level for the market to pause."

US President Donald Trump said on Thursday he would meet with Chinese President Xi Jinping soon to try to seal a comprehensive trade deal. Trump and his top trade negotiator both reported substantial progress in two days of high-level talks, initially propelling stock markets to four-month highs. [MKTS/GLOB]

However, providing underlining strength to gold was a dovish Fed, which signalled on Wednesday that its three-year drive to tighten monetary policy may be at an end, while further suggesting that its balance sheet may remain larger than anticipated.

Additionally, data on Friday showed Chinese factory activity shrunk by the most in almost three years in January, adding to concerns of global growth, which has triggered increased interest for gold of late.

"Gold is likely to consolidate in the $1,315-$1,320 range. The overall outlook for gold is still positive," said ActivTrades chief analyst Carlo Alberto De Casa.

Reflecting investor interest, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose to their highest since June on Tuesday.

Investors now await the US jobs data, due later on Friday, for indications of economic strength in the country.

Elsewhere, Palladium rose 0.8 percent to $1,354.31 per ounce, while platinum fell 0.2 percent to $818.

Silver fell 0.5 percent to $15.98 after rising to its highest since July 2018 at $16.19 in previous session.