Other precious metals - silver, platinum and palladium - ended down after easing with weaker gold early in the session.
Although general bullishness on gold for 2006 continued to prop up prices, dealers said that stiff resistance up at $520 an ounce was capping the market's gains for now.
"Today it was a bit more probably producer-type business in the marketplace, rather than some of the fund business that we've seen," said Bernard Hunter, a director at ScotiaMocatta in Toronto.
"Some of the producers are squaring up their positions for the year," he added. "Funds are probably a little more quiet than they were recently. But we did see a rally toward the close."
February delivery gold was up $1.20 at $517.50 an ounce at the New York Mercantile Exchange's COMEX division, after gyrating around a range between $512.80 and $520.10.
The choppy session followed a rise to two-week highs in Tokyo gold futures and spot gold overnight fuelled by upbeat sentiment on gold heading into next year, traders said.
"There's no volume because some dealers have sold at $520 and now don't want to do anything," one COMEX floor source said.
New York metals are set to close early near noon on Friday and remain shut on Monday for the New Year's market holiday.
"Tomorrow, given that it's a half-day, anyone who still has any stuff to square up will get it done early," said ScotiaMocatta's Hunter. "We might have a $4 to $5 range, but we'll probably close in much the same spot.
"Everyone does seem to be fairly positive looking into next year," he added.
Estimated volume was 40,000 lots, vs. 52,624 on Wednesday. Open interest rose 1,887 contracts to 322,002 lots.
One floor dealer said he was surprised by the 10.5 percent drop overnight in COMEX gold warehouse stocks. Inventories fell 680,603 ounces to 6,497,818 ounces on Wednesday.
For the year, the price of COMEX gold is up 18 percent, as investors diversify into commodities from other assets and amid concerns about economic growth and geopolitical events.
Gold in the last six months also has broken free from its typical inverse relationship to the dollar, enabling factors like tight supply and strong demand to hold sway over prices.
Many analysts expect COMEX gold to target December's near 25-year high at $544.50 early in 2006. Dealers pinpointed first resistance in February gold at $520 an ounce, followed by $522 and $530, with support at $510, $505, and last week's one-month low of $492.30.
Spot gold, meanwhile, ended at $515.70/516.40 an ounce, above Wednesday's New York close at $513.70/4.40. Thursday's afternoon fix in London was at $513.
On December 12, bullion hit a near 25-year high at $540.90.
March silver fell 5.3 cents to $8.882 an ounce, patrolling a range from a two-week high of $9.03 to $8.74. Spot silver last stood at $8.82/84, below its last close of $8.84/87. It fixed at $8.905.
NYMEX January platinum lost $6.90 to end at $964.20 an ounce. January-into-April rollover has been the main feature to trading before first notice day for delivery next week, a floor trader said.
Spot platinum finished at $963/967 an ounce.
Illiquid March palladium fell $8.20 to $256.80 an ounce. Spot reached $253/257.