Gold rose in unison with equities and commodities on Friday, notching a weekly gain, after U.S. nonfarm payrolls data showed modest job growth in January.
Bullion prices climbed after the Labor Department also said U.S. job gains in the prior two months were bigger than initially reported, supporting views the economy's sluggish recovery was on track despite a surprise contraction in output in the final three months of 2012.
Other data showing improved U.S. factory activity and better consumer confidence data also sent the Dow above 14,000 for the first time since October 2007, lifting gold and industrial commodities, led by crude oil.
The decent payrolls data and signs of a recovering U.S. economy, however, have dampened gold's investment case as a hedge against further monetary stimulus by the Federal Reserve and its safe-haven appeal, an analyst said.
"As an investor, I really do struggle with gold because along with any other commodities, gold does not have a yield, so the actual investment case of holding it is shaky," said Frances Hudson, global thematic strategist at Standard Life Investments, who helps manage its $247 billion in assets.
Spot gold was up about 0.30 percent above $1,668 an ounce, while U.S. COMEX gold futures for February delivery settled up $8.60 an ounce at $1,670.60. It held above its 200-day moving average at $1,663 an ounce, a key chart level.
The metal briefly turned lower in a knee-jerk sell-off after St. Louis Fed President James Bullard said the U.S. economy is on track for a better performance this year, which will put the central bank in a position to slow or halt its massive bond-buying program.
Gold gained 0.6 percent this week, offsetting some of the previous week's 1.5 percent loss. It remains flat on the year, however, as signs of improvement in the U.S. and euro zone economies boosted investor appetite for other assets.
Spot silver advanced by more than one percent near $32 an ounce, as the more volatile metal outperformed gold.
(Read More: Gold or Platinum--Which Will Get to $2,000 First?)
Gold's link to stocks and industrial commodities has been largely erratic over the past year. Earlier this week, data showing a surprise shrinkage in the U.S. economy in the fourth quarter boosted bullion prices while weighing down on equities.
The market is digesting news India's central bank plans to introduce three to four gold-linked products in the next few months, in an effort to bring 20,000 tonnes of gold held in households into the banking system. India is the largest importer of gold.
Meanwhile, Turkish gold imports rose to 11.27 tonnes in January from 2.96 tonnes a year before.
CME Group, the largest U.S. operator of futures exchanges, said it would add platinum and palladium options to its Globex electronic platform from late in February in a move to capitalize on growing investor interest in the metals.