Gold spiked more than 18 percent in the year and is forecast to gain further in 2006 as funds and investors see it as a haven amid worries about inflation, economic growth and geo-politics.
"The outlook for the new year will remain bullish, gaining support from positive technical and fundamental factors, such as strong global jewellery demand and increased investor interest of diversifying into commodities as an alternative asset class," Standard Bank said in a daily report.
Spot gold was quoted at $515.90/$516.65 an ounce by 1508 GMT, little changed from $515.70/516.40 in late New York trading. It surged to a near-25-year peak of $540.90 earlier this month.
Several markets will close early on Friday and remain shut on Monday for the New Year market holiday.
Profit-taking ahead of the final European and US trading sessions of the year pushed the metal away from its peaks, but the outlook was positive, dealers said.
"With gold set to close above $500 the prospects of further gains in 2006 are looking very strong," said James Moore of TheBulliondesk.com.
RBC Capital Markets noted in a daily report that gold equities finished at a nine-year high on Thursday.
Currency and oil markets loosened their influence on the metal, which has broken its traditional inverse relationship to the dollar in recent months and has gained despite a rise in the US currency.
Oil prices eased on Friday but still traded around $60 a barrel, partly boosted by lower US fuel stocks. Gold is often seen as a hedge against inflation.
Other precious metals - silver, platinum and palladium - were little changed from their last quotes in New York.
Spot silver was up one cent to $8.83/86 an ounce, while platinum gained to $966/69 versus $963/967.
Palladium was flat at $253/257 an ounce.