Spot market gold bullion prices hovered just below $1670 an ounce for most of Friday morning's London trading, a few dollars below yesterday's four-month high.
Stock markets ticked lower and U.S. Treasuries gained, as analysts continued to speculate on the prospects for more quantitative easing from the U.S. Federal Reserve.
Heading into weekend, spot market Dollar gold prices looked set for a gain of more than 3% on the week, after gold rallied following Wednesday's publication of Fed policy meeting minutes.
"Additional stimulus is inevitable, the question is how it comes," reckons Charles Morris, who manages around $2.5 billion at HSBC Asset Management.
"There's no doubt about it, this is gold's moment. All the long-term trend signals suggest that gold is in a very strong bull market."
Going by the PM London gold fix, a fix of $1,668/oz or higher this afternoon would make this gold's biggest weekly gain since January.
Federal Open Market Committee minutes published Wednesday said that "many members" judge that more monetary stimulus, such as a third round of quantitative easing (QE3), could be needed "fairly soon" if economic data did not point to a recovery.
"If [August's nonfarm payrolls report shows] another 150,000 or more jobs added, that buys them some time," says Tom Porcelli, chief U.S. economist at RBC Capital Markets, referring to the monthly report from the U.S. Bureau of Labor Statistics showing the net addition of private sector jobs added by the economy.
"If it's 100,000 or below," adds Porcelli, "I think they will consider teeing up QE3 for September."
August's nonfarm payrolls report is due to be published September 7, with the FOMC meeting the following week.
The volume of gold bullion held to back shares in the SPDR Gold Trust (GLD), the world's largest gold ETF, rose to its highest level since April yesterday at 1286.5 tonnes.
On the Shanghai Gold Exchange meantime, gold forward contracts hit their highest levels in nearly five months Friday, with trading volumes also rising.
Wholesale silver bullion prices meantime hovered above $30.30 per ounce Friday morning – nearly 8% up on the week – while other commodities were also flat on the day.
"In the short-term, it would be difficult to see considerably higher commodity prices without quantitative easing from central banks," says Daniel Briesemann at Commerzbank.
"In the long term [though], I don't think that commodities need quantitative easing measures, as they can rise without it. The economy should recover and demand in emerging markets is still relatively robust."
Here in Europe, leaders must "stand by [their] obligations" according to a statement from German chancellor Angela Merkel, released following Thursday's meeting with French president Francois Hollande to discuss Greece.
"We, and I, will encourage Greece to pursue the path of reform that demands a lot from the people," said Merkel.
A day earlier, Eurozone finance chief Jean-Claude Juncker said it "would not be advisable to put further demands" on ordinary Greek people who "have suffered a lot."
Greek prime minister Antonis Samaras is due in Berlin today for talks with Merkel, where he is expected to ask for additional time to implement austerity measures. Samaras then heads to Paris tomorrow to meet Hollande.
Bond market intervention by the European Central Bank aimed at lowering sovereign borrowing costs would not represent a breach of the central bank's mandate, German finance minister Wolfgang Schaeuble says in today's Irish Times.
Last Saturday, by contrast, Schaeuble suggested that such a policy would be "like when you start trying to solve your problems with drugs."
ECB president Mario Draghi said Friday that the central bank will wait until a preliminary ruling by Germany's Constitutional Court before revealing any details of a bond buying plan. The Court is due to make a ruling on September 12 over whether creating the Eurozone's permanent bailout fund violates German law.
Here in the UK, the economy shrank by 0.5% in the second quarter, according to second estimate gross domestic product figures published Friday.
In a report published Thursday, the Bank of England argues that its quantitative easing policy has had a "neutral" effect on people preparing for retirement, since while annuity rates have fallen, the value of assets in pension pots has risen.
In addition, "asset purchases have boosted the value of households' financial wealth held outside pension funds," the report says, "although holdings are heavily skewed with the top 5% of households holding 40% of these assets."
Across the Atlantic, the creation of a "gold commission" to examine the possibility of restoring the Dollar's link to gold bullion is set to become official Republican party policy, the Financial Times reports.
"There is a growing recognition within the Republican party and in America more generally that we're not going to be able to print our way to prosperity,” says American Principles Project chairman Sean Fieler.
A similar commission three decades ago recommended not returning to gold, with Ron Paul dissenting and writing the minority report, which was later published as "The Case for Gold."
Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.
(c) BullionVault 2011
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