Spot gold edged $2.80 higher to $1,731.00/1,731.80 per ounce, recovering after yesterday's 1.3-percent fall. On the charts, resistance is now pegged at $1,737 and then $1,740, while support stands at $1,730 and the 21-day moving average of $1,721. The metal is in better shape to break out on the upside after last night's positive close.
Asian markets remained quiet overnight amid a lack of volume in the overall precious metals complex, while little action is expected today ahead of next week's Greek bailout decision.
Eurozone officials said on Thursday that they were putting the finishing touches to a second bailout deal for Greece for approval on Monday.
The euro, which dropped to one-month lows under 1.30 against the dollar on Thursday, was trading around a steadier 1.3135 this morning - hopes have picked up that Greece has done enough to secure the bailout after it slashed its budgets further.
But the swingeing cuts are unlikely to find favour with an already indignant Greek public, a trader said.
"With such obvious tensions simmering barely beneath the surface, Monday feels a long way off, and headline risk will be heightened over the weekend," he said.
Some positivity emanated from the recent run of largely constructive US economic figures - jobless claims unexpectedly fell last week to a near-four-year low, January housing starts came in better than forecast and the pace of factory activity gained momentum.
And positive CPI figures are also anticipated today - these could prompt a risk rally in afternoon trading hours.
But while the US economy appears to be improving, Europe's economic activity is restrained and China has yet to pick up fully in the wake of the Lunar New Year. This is seen keeping the short-term picture uncertain in the wider commodity sector.
Among other precious metals, silver was steady at $33.49/33.53 per ounce - the metal dropped to a three-week low of $32.64 per ounce yesterday.
Elsewhere, platinum rose $2 to $1,630/1,640 per ounce, having fallen to a 10-day low of $1,603.50 per ounce in the previous session. But palladium remained in negative territory at $687/704, down $8.50 but higher than a three-week low of $676.50 hit on Thursday.
The PGMs are likely to keep be supported by the work stoppage over wages at Implats' Rustenburg mines, which started on January 18 and has already cost the company more than 60,000 ounces in lost output.
"With a production volume of around 920,000 ounces planned for this year, Rustenburg accounts for 14 percent of the world’s total platinum production," broker Commerzbank said. "If no agreement is reached in the near future, this should lend clear support to the price of platinum." Read More
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