Gold rose more than half a percent on Friday, heading for a second straight weekly gain after the European Central Bank cut interest rates to an all-time low and the U.S. Federal Reserve maintained its bond-buying stimulus programme.
Gains could still be capped by daily outflows on exchange-traded funds, with investors unsure if a recent surge in physical demand is sufficient to help gold recapture the psychological level of $1,500 an ounce.
Gold rose $8.97 an ounce to $1,475.21 by 0323 GMT.
"Sentiment is of course not that good because there's still redemption on the ETFs, while the physical market is upbeat. You can say it's a tug-of-war," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
A break above a recent high around $1,485 an ounce could help gold revisit $1,500, Leung said.
Cash and U.S. gold futures plunged to around $1,321 on April 16, their lowest in more than two years, after a drop below $1,500 led to a sell-off that stunned investors and prompted them to slash holdings of exchange-traded funds.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.56 percent to 1,069.22 tonnes on Thursday -- the lowest since September 2009.
But the drop in prices also spurred purchases of gold bars, coins and nuggets across Asia and in other parts of the world, keeping physical premiums at multi-year highs around $3 an ounce to the spot London prices.
With prices in Shanghai fetching premiums to cash gold and U.S. bullion futures, jewellers, investors and speculators in the world's second-largest consumer after India stepped up purchases after a recent holiday break.
U.S. gold was at $1,474.80 an ounce, up $7.20.
"Chart based resistance remains in the $1,475-$1,480 an ounce area, which has held the topside for five sessions. Near term support is at $1,440 an ounce," said ANZ in a report.
The ECB cut its main interest rate by 25 basis points to a record low of 0.50 percent on Thursday, after inflation fell well below the bank's target and weak economic surveys increased doubts about a recovery.
The decision came a day after the U.S. Fed's recommitment to its aggressive stimulus programme, and a month after the Bank of Japan stunned markets by promising to inject about $1.4 trillion into its economy to spur growth.
Investors are waiting for the U.S. nonfarm payrolls report for April due on Friday for clues on the longer-term prospects for the Fed's monetary stimulus, which could stoke inflation and burnish gold's safe haven appeal.
Easy monetary policy extended gold's bull run to a 12th consecutive year last year, as investors bought bullion as a hedge against inflation and economic uncertainties.
Shares across Asia mostly rose on Friday after the interest rate cut from the ECB and as prospects for more easing lifted hopes that fresh stimulus from yet another major central bank will help foster a stronger global recovery.