Shanghai - Gold prices were steady on Thursday, with buyers cautious on the physical market, as investors awaited key US job data due later in the day to scrounge further clues on health of the economy.
Data released on Thursday showed a surprise rebound in pending sales of previously owned homes in July, as well as a fall in new jobless claims last week in the US
But the August US non-farm payroll figures due on Friday, expected to show a loss of 100 000 jobs, might dampen recovery hopes raised by this week's positive data, and spur safe-haven demand in gold.
"In the case of disappointing US employment data, we could see gold test the historical high of $1 265 tonight," said Louis Lok, a dealer at Bank of China in Hong Kong, adding that even though market sentiment was close to being overbought, bullion was still likely to move higher.
The Relative Strength Index, or RSI, stood at 68.065, just below the 70 level which is seen to mark an overbought market.
Despite the bullish sentiment, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, fell for the first time in a week on Thursday with the drop of 9.12 tonnes marking the largest one-day decline since late July.
But dealers traced it to profit-taking by some fund investors. "For the longer term, there is still good reason for gold to go higher," said Lok.
Spot gold was little changed at $1 250.44 an ounce by 05:52 GMT, just $15 below the record high of $1 264.9 hit in June. It is heading for a weekly gain of 1.2%, its fifth straight week of rises.
US gold futures for December delivery was barely changed at $1 252.6.
Technical analysis showed bullion may edge up to $1 275 an ounce over the next week, indicated by an ascending channel and a big triangle, said Wang Tao, a Reuters market analyst.
Physical market activity was slow, as buyers become cautious when prices approach the historical peak.
"We'll see if the Indians will continue to buy at this level or just wait and see. People are a bit cautious when prices are at this level," said Ronald Leung, a dealer at Lee Cheong Gold Dealers.
Gold demand from the subcontinent traditionally surges at this time of year, in preparation for the Hindu festival and wedding season when the precious metal is widely gifted.
Spot silver is poised to rise for the second week in a row, building on last week's ascent of nearly 6%. Silver stood at $19.57 an ounce, barely changed from Thursday.
Platinum rose 0.5% to $1 550.90 an ounce, on course for a 1.5% gain from a week earlier.
A takeover battle has erupted for Australian-listed gold miner Andean Resources with Canadian miners Goldcorp and Eldorado Gold Corp making bids for the firm.