Spot gold was marginally softer at $1,723.91 an ounce by 1523 GMT, headed for a 1.6 percent weekly drop and a narrow monthly gain of around 0.2 percent. US gold was down 0.19 percent at $1,724.00. "The US economic data came in a little worse than expected, which is weighing on risky assets, leading to a slight decline of gold," said Peter Fertig, consultant with Quantitative Commodity Research.
While bullion managed to recover from a 1-1/2-week low of $1,705.64 an ounce hit on Wednesday in a technically-driven sell-off, upside resistance held at $1,750 in a market roiled by conflicting comments from Washington about the US budget negotiations. House of Representatives Speaker John Boehner said on Thursday that "fiscal cliff" talks with the White House had made no substantive progress and criticised President Barack Obama and Democrats for failing to get serious about including spending cuts in a final deal.
Simon Weeks, head of precious metals at Scotia Mocatta, said that if a breakthrough came in the talks, gold would likely initially follow any bounce in risky assets. On the investment front, Commerzbank said in a daily market report on Friday that inflows of gold into exchange-traded funds (ETFs) highlighted buoyant demand for the yellow metal.
Holdings of SPDR Gold Trust GLD, the world's biggest gold-backed exchange-traded fund, stood at a record high of 1,347.018 tonnes, up nearly 11 tonnes in its fourth consecutive month of gains. Global gold demand in 2013 should be led by further strength in Chinese demand and a recovery in India, helping the precious metal continue its bull run into its 13th year, the industry-backed World Gold Council said on Friday.
Spot palladium rose 0.37 percent to $684.25, on course for a fifth week of gains and a monthly rise of around 14 percent, its strongest since December, 2010. Concerns about supply and technical buying helped send palladium to a 2-1/2-month high of $689 on Thursday. Spot silver inched down 0.23 percent to $34.13, on course for a monthly gain of around 6 percent. Spot platinum was headed for a rise of more than 3 percent in November, and last traded at $1,610.50 per ounce, up 0.28 percent.