Tokyo - Gold hovered just below $1 000 on Friday, taking a break after its strongest two-day performance since March as safe-haven demand stoked renewed investor buying.
Worries about the global economy and the sustainability of this summer's stock market gains have pushed bullion, traditionally a port of refuge during economic storms, up about 5% over the past two days to a six-month high on Thursday.
The precious metal is on course for its biggest weekly gain since late April.
Gold is also seen as a hedge against inflation, a factor that is gaining increasing prominence as central banks keep pumping money into the financial system to jolt the economy.
Shuji Sugata, a manager at Mitsubishi Corp Futures & Securities, said the rise was driven by technicals as money that had been flowing to other commodities such as crude oil, raw sugar and soy beans now went to gold, after those commodities peaked.
"When the outlook is uncertain, money tends to flow to the market which is showing a clear trend ... in this case precious metals led by gold," he said. Trend-following money is what is spurring the rise in gold, he said.
Spot gold was at $989.30 by 05:15 after touching a peak of $997.20 on Thursday.
US gold futures for December delivery, now at $991.40, came even closer to four digits with a session peak of $999.50 per ounce on Thursday.
Gold last approached $1 000 on June 3, when it rose to a peak of $993.60 as gold's traditional inverse relationship with the dollar appeared to reassert itself.
It tumbled the next day in heavy profit-taking.
Gold last topped $1 000 on February 20, the highest level since March 2008.
"Gold had a positive correlation with stocks for the last three months, but now that there are signs of weakness in stocks investors are turning to the metal in flight-to-quality buying," said Masayo Kondo, president of Fisco Commodity.
US stocks fell for four days running before Thursday's late day rally snapped the losing streak , with US retail sales in August coming in stronger than expected even if still down 2.9% on the year.
Regional stocks fell on Friday, with Japan's Nikkei average edging down 0.2% in thin, see-saw trade with traders reluctant to buy ahead of key US jobs data, while Chinese stocks opened down 0.14%.
The key economic number this week comes up later on Friday when US non-farm payrolls data is released, with employers expected to cut jobs by the smallest amount in a year.
Strong investment demand is also helping to fuel gold's gains.
The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings stood at 1 078.01 tonnes as of September 3, up 14.65 tonnes or 1.4% from the previous business day.
It was the second day of gains for the fund, which marked a record high of 1 134.03 tonnes on June 1.
Investors lost interest in the fund for about a month from mid-July when holdings fell about 3% as worries about inflation eased.
- Reuters