Gold hovered near a 4-1/2 month high on Friday, poised for its biggest weekly rise in more than two months, as investors pondered the possibility of imminent bond buying by the U.S. Federal Reserve.
Fundamentals
* Spot gold was trading nearly flat at $1,669.79 an ounce by 0035 GMT, on course for a 3.3-percent climb from a week earlier.
* The U.S. gold futures contract for December delivery was little changed at $1,672.50.
* Spain is negotiating with euro zone partners over conditions for aid to bring down its borrowing costs, though the country has not made a final decision to request a bailout, three euro zone sources said on Thursday.
* Growth in the U.S. manufacturing sector picked up in August, a sign the economy is resisting the global economic chill although a rise in new jobless claims last week pointed to a still-sluggish labour market.
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* St. Louis Federal Reserve President James Bullard said the U.S. economic outlook had brightened since the Fed's last policy meeting on July 31-August 1, playing down the odds of imminent bond buying by the central bank.
* SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, said its holdings had risen to a 4-1/2 month high of 1,286.621 tonnes by August 23. Holdings of the fund have increased by 34.6 tonnes so far this month, compared to an outflow of more than 27 tonnes last month.
* Spot silver was also little changed, at $30.52, heading for a weekly rise of more than 8 percent, which would be its largest since end of last October.
* Spot platinum gained 0.4 percent to $1,544.50, on course for a second straight week of gains and its sharpest weekly rise in six months.
Market news
* U.S. stocks fell on Thursday on diminished expectations for quick stimulus action from the Fed and as Chinese and euro zone data pointed to a stalling global economy.
* The euro eased from a seven-week high hit in the previous session on a report that Spain is negotiating with the euro zone over conditions for aid, though a final decision to request a bailout has not been made.