Spot bullion hovers around $1295 mark
Gold rose on Friday to notch its second weekly gain after many investors were soothed by the Federal Reserve's assurance this week that it will be careful in tapering its economic stimulus, although some braced for another decline in bullion.
Gold emerged as an alternative to the softer dollar and U.S. stocks, which retreated on Friday from record highs.
The spot price of bullion hovered near $1,295 an ounce by 3:00 p.m. EDT (1900 GMT), up 0.8 percent on both the session and the week.
U.S. gold futures for August delivery settled at $1,292.90 an ounce, up 0.7 percent on the day and 1.3 percent on the week.
On Wednesday, gold tumbled about 1 percent after Fed Chairman Ben Bernanke reiterated the U.S. central bank's intent to scale back later in the year its $85 billion in monthly bond purchases, a program that has fueled precious metal price gains.
The Fed's ultra-loose monetary policy has retained pressure on long-term interest rates while its stimulus has added to fears of inflation, stoking gold prices.
Bernanke, addressing Congress over two days, later said that the Fed's stimulus-tapering plans were not set in stone and depended on the strength of the economy. That helped the gold market recover on Thursday and Friday.
Despite the Fed chief's assurance, some braced for another investor stampede out of gold in the near term.
"I'm still a bear, maybe on the wrong side of the camp, but with the stock market possibly hitting another record and with any slight uptick in interest rates, we could be looking at gold going very quickly below $1,100," said Frank McGhee, chief precious metal at Integrated Broking Services in Chicago.
"This market is so unpredictably violent that it could roll off a couple of hundred dollars in just three sessions."
Bullion has slipped more than 20 percent this year on the Fed's hints that its monthly bond-buying program may end altogether by mid-2014.