Gold edged up on Friday, rising in tandem with other commodities and equities, after lower-than-expected inflation data out of China suggested more monetary easing could be on its way.
China's annual rate of consumer inflation slowed sharply to a 20-month low of 3.2% in February, comfortably within Beijing's 2012 target of 4%, giving policymakers room to further loosen monetary policy to support slowing growth.
The prospect of ample cash in the market offset the appeal of gold as an inflation hedge in the short term, analysts said.
"A lower headline inflation number means that the central bank can continue to be very accommodative, which means printing more money," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong.
"The more money it prints versus the gold out there, the more it should raise the value of gold versus that money."
Spot gold gained 0.3% to $1,705.16 an ounce by 0315 GMT (0845 IST), on course for a 0.7% fall this week, its second weekly decline in a row.
US gold edged up 0.4% to $1,706.00.
Technical analysis suggested that spot gold could rise towards $1,712 an ounce during the day, said Reuters market analyst Wang Tao.
Expectations of a successful bond swap deal between Greece and its private-sector debtors also helped buoy the market sentiment, even though many believe Greece's troubles are nowhere near an end as the deal will not solve its deep-seated economic problems.
"People are still worried about the economic conditions and would rather not buy large quantities of physical gold at this point," said Dick Poon, manager of precious metals at Heraeus in Hong Kong.
Poon said that physical buying dropped after prices rebounded above $1,700 as investors adopted a wait-and-see attitude, especially before the release of the key US non-farm payrolls data due later in the day.
Silver and platinum prices were on course for a third straight session of gains, although both headed for weekly losses of more than 1%.
Spot silver rose more than half a per cent to $34.04 an ounce. Spot platinum gained 0.6% to $1,668.24.
* US stocks rose on Thursday, recovering most of the week's losses, after Greece moved closer to a bond swap with private creditors to avoid a messy default.
* The euro and commodity currencies held on to overnight gains in Asia on Friday after Greece moved closer to securing fresh funds needed to avoid a messy debt default.