Gold inched up on Thursday ahead of a European Central Bank meeting that could set the tone for the euro, while platinum and palladium held near their highest levels in 17 months on hopes of a better economic outlook.
Bullion has been trading in narrow ranges so far this year after signs of an improvement in the global economy prompted some investors to shift to risky assets such as equities and industrial metals.
Gold hit an intraday high at US$1,680.95 as buying interest resurfaced before the Lunar New Year break in Asia and ahead of the ECB meeting. It later stood at US$1,677.41 an ounce by 0721 GMT, steady from the previous session.
The euro, which often dictates gold's movements, could fall if ECB President Mario Draghi voices concerns about the currency's recent sharp rise.
"We see a lot [of] leading economic indicators supporting platinum and palladium. The economic outlook seems to be brighter than most of us have expected," said Joyce Liu, an investment analyst at Phillip Futures in Singapore.
"Gold is very much dependent on the outcome of the ECB. I don't think today they will give us a clear indication whether the euro is indeed overvalued. If they try to weaken the euro because the economy hasn't bottomed out, then in that case, it's possible gold may go up a bit."
Platinum was up US$3.76 an ounce at US$1,736.50 after rising to US$1,740 on Wednesday, its strongest since September 2011. Palladium was little changed at US$761.00 an ounce after hitting a high of US$769.50 in the previous session, also its peak since September 2011.
Both metals, which are used in jewellery and auto catalysts, have gained on an improving economic outlook and after mining
disruptions in South Africa, as well as a drop in supply from Russia, triggered fears of a deficit.
US gold futures were barely changed at US$1,678.30 an ounce, but a weaker Japanese yen against the dollar sent gold futures on Tokyo Commodity Exchange (TOCOM) to another record at 5,081 yen a gram.
Shares and the euro paused from recent gains on Thursday, as investors awaited the ECB's policy meeting.
None of the 75 economists surveyed in a Reuters poll last week forecast a cut in rates from their record low of 0.75 percent on Thursday. The poll suggested the ECB would not change its rates until at least July 2014.
"There's a bit of buying from jewellers but a small amount of purchasing has already pushed up the market because volumes are light," said a physical dealer in Hong Kong.
A weak yen also lifted platinum futures on TOCOM, with the most active December contract jumping to its highest since early 2010 at JPY5,299 a gram.
With the Bank of Japan committed to open-ended asset purchases from 2014 and aiming for a 2 percent inflation target, pressure on the yen is likely to continue, market participants said.
"In Japan, there's technical buying of platinum and palladium because the yen has depreciated so much. It has triggered short-covering. We don't see much buying of platinum here," said the physical dealer in Hong Kong.
"Gold is stuck in a big range of US$1,650 to US$1,700. We heard that people are selling gold and buying stocks in the euro zone. Europe is more stable after many years of struggle, and people are ready to enter the stock markets."
Premiums for gold bars in Hong Kong eased to US$1 to US$1.50 an ounce to the spot London price from as high as US$1.70 last week as physical activity began to slow down ahead of the long Lunar New Year break.
China's gold production rose for a sixth consecutive year to hit a record 403 tonnes in 2012, keeping its ranking as the world's largest bullion producer, the Shanghai Securities News said on Thursday.