Gold fell from a 7-week high on Friday as speculators booked profits ahead of US GDP data, but prices were heading for a fourth week of gains with the Federal Reserve's pledge to keep interest rates near zero for some time supporting sentiment.
Although gold investors were relieved by the Fed's move to keep rates historically low, they will now turn their attention again to the outcome of the Greek debt crisis, with US funds still cautious about lending to banks in the troubled euro zone.
A Reuters poll showed gold's record-breaking rally of the last decade is set to extend into this year and the next as monetary policy stays loose and central banks build reserves.
Gold hit a high around $1,723 an ounce before slipping to $1,718.70 by 0710 GMT (1240 IST), down $1.34. Gold rallied to $1,729.76 on Thursday, its strongest since early December, but was still well below a record around $1,920 hit last September.
"I think it's a good time to buy gold scraps again, but clients are all cautious. They are doing enough to roll their money but keeping it all for the possibility of buying back," a physical dealer in Singapore said.
"The market has been like a yo-yo."
Cash gold prices were on track for a more than 3% rise this week. US gold fell $7.8 an ounce to $1,718.9 an ounce.
"Some of the key data that market participants could be focusing on will be the first reading of the Q4 US GDP. I think a positive reading in general will be good for risk assets and gold as well," said Ong Yi Ling, an analyst at Phillip Futures in Singapore.
"I am actually looking for the next resistance level at about the $1,800 level," said Ong, adding that gold was prone to profit taking after recent gains.
The United States will release gross domestic product data for the fourth quarter later on Friday, and a 3% bounce as forecast could bolster risk-positive sentiment.
The euro was on track to be one of the week's best performers with a gain of 1.8% as the Fed's latest move on interest rates encouraged carry trades funded in dollars.
Investors' attention will again shift to Greece as debt talks with private creditors resume on Friday. Any resolution to avoid a messy default could see the euro break higher.
Greece and its private creditors made progress on Thursday in talks on restructuring its debt, both sides said, and they will continue negotiating on Friday with the aim of sealing an agreement within a few days.
Gold, typically a safe-haven asset, has been tracking the fortunes of the euro and stocks, with speculators selling the metal for cash to cover losses in other markets, especially during this period of uncertainty in Europe.
"There's some selling from Thailand, and also Indonesia. But I've told customers that it's better not to sell now because the market may still go up again," said another physical dealer in Singapore.
"Maybe it's better to wait until Monday when the Chinese market reopens and see whether they will buy some more gold or they will take profits."
The broad asset rally which the US Federal Reserve inspired by pledging to keep rates low decelerated on Friday as investors awaited the outcome of Greek debt talks and US gross domestic product data.
