Gold edged higher on Friday as the euro steadied against the dollar, but was on track for its first weekly fall in three weeks after brightening job prospects in the United States hurt its appeal as an alternative investment.
A slight increase in SPDR Gold Trust's exchange-traded holdings -- the first since mid-March -- offered a glimmer of hope for the metal, which has fallen 12 so far this year as investors switch funds into a rallying equity market.
Spot gold dipped to $1,452.84 an ounce before rebounding to $1,460.31, up $2.61. U.S. gold futures for June delivery hit a session low of $1,451.60 an ounce and stood at $1,459.60 by 0435 GMT, still down $9.00.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.26 percent to 1,054.18 tonnes on Thursday from 1051.47 tonnes on Wednesday, but are still near 4-year lows.
Analysts said a pause in selling would support gold, but it was too early to call a halt to sales.
"If you look at total gold holdings, not only SPDR, they are still coming down. I won't be so quick to say that sentiment is changing," said Joyce Liu, an investment analyst at Phillip Futures in Singapore.
"At least for now, physical buying can still provide some support. All hopes are now actually pinned on China. The demand in India is slowing because the Tritiya festival is coming soon and most traders have stocked up."
India, the world's biggest gold consumer, celebrates Akshaya Tritiya next week, the biggest gold-buying festival after Dhanteras.
Premiums for gold bars in Singapore, which sells gold to India, slipped to $2.50 an ounce to spot London prices from $3 last week. But supply remained tight in Hong Kong due to strong demand from second-largest consumer China, keeping premiums at multi-month highs at $3.
"People in Hong Kong are still complaining about tight supply. It looks like at those retail shops, their stocks are swept out every day," said a dealer in Singapore.
Gold sank to around $1,321 on April 16, the lowest in over two years, after worries about central bank sales and a drop below $1,500 led to a sell-off that stunned investors, prompting them to slash ETF holdings.
The price drop spurred a surge in physical buying in Asia and other parts of the world, which helped pluck prices from the lows. Chinese gold imports are expected to swell further after more than doubling to an all-time high in March.
"How long can China support the physical market? But I think it still can provide some support in the short to medium term. Technically, gold can test the $1,487 level again," said Liu at Phillip Futures.
Japanese equities soared to a 5-1/2-year peak on Friday as the dollar's break above the symbolic 100 yen level underpinned sentiment, while Asian shares fell as global equities took a breather from recent rallies overnight.
A falling yen lifted gold futures on Tokyo Commodity Exchange, with the most active contract, currently April 2014, rising to its highest since mid-April.