Gold prices surrendered gains on Friday as the dollar moved into positive territory against a basket of currencies, but the metal stayed on track for its biggest quarterly gain in more than two years on the back of this month's central bank easing measures.
The precious metal is within $10 of the 6-1/2 month high it hit earlier in September after the Federal Reserve unveiled a third round of gold-friendly quantitative easing, a move widely tipped to spark a rally back above $1,800 an ounce.
Gold is on track to climb 10.9% this quarter, its best quarterly performance since the second three months of 2010, although gains in the dollar on the back of the euro zone debt crisis have kept prices in check.
Spot gold was down 0.3% at $1,772.31 an ounce at 1349 GMT, while US gold futures for December delivery were down $5.30 an ounce at $1,775.20.
"The most obvious catalyst for gold to break higher this year is going to be good news out of Europe," Mitsui Precious Metals analyst David Jollie said. "Anything that is dollar negative is going to help gold move to fresh highs for the year."
"To see resistance at the previous highs is not a major surprise," he said. "I think the market is still viewing this as period of consolidation, and not the end of a move."
Bad news continued to dog Europe on Friday as Spain's borrowing costs rose back above 6% and European shares dropped. The upbeat reaction to Madrid's new debt cutting plans gave way to anxiety over its troubled banks, France's finances and faltering global growth.
The euro surrendered early gains to drop 0.1% against the dollar, pushing gold lower.
Gold priced in euros held near the previous session's record high of 1,380 euros an ounce, hit after rising spot prices coincided with a weaker euro. Euro-priced gold was up 0.1 percent at 1,376.48 euros an ounce.
"(The) gold price has just recently peaked in Indian rupee, euro and Swiss franc terms, indicating monetary stimulus particularly benefits gold and this is not just a weak dollar story," bullion broker Sharps Pixley said in a note.
Coin, physical fund sales pick up
The precious metal has posted a positive quarter in terms of investment in gold exchange-traded funds, popular investment vehicles backed by physical stocks of bullion. ETFs tracked by Reuters are on track for their biggest quarterly inflows in well over a year, of 3.285 million ounces.
Sales of gold American Eagle coins by the US Mint also improved from the previous quarter after a late-September jump to hit 138,000 ounces in the third quarter, up from 133,000 ounces in the previous three months. However, that is still the second-lowest quarterly figures in more than two years.
From a technical perspective, gold's bias is generally positive but it is facing resistance at its 2012 high at $1,791 an ounce, analysts who study past price patterns to determine the future direction of trade said.
"A move above $1,788 in gold would confirm a base at $1,737 and open the $1,803 range highs," Barclays Capital said in a note. "We are bullish and look for a break above there to open the $1,921 highs."
Other precious metals also recorded a positive quarter, with silver the star performer, rising more than 25%. Spot silver was down 0.4% at $34.48 an ounce.
Spot platinum was up 0.6% at $1,652.24 an ounce, on track for a 14.5% quarterly rise, while spot palladium was up 0.8% at $635.47 an ounce.
It is set to climb 9.3% this quarter, the underperformer of the precious metals pack, but still its best quarterly performance since the second quarter of 2010.