Gold rose nearly 2 percent on Friday, after dropping for four of the past five sessions, as a weaker dollar and falling equity markets underpinned demand for assets perceived as safer.
Oil prices dove below $29 a barrel, dragging major equity indices around the world sharply lower, as fears of a global slowdown amid a crude supply glut roiled markets and unsettled investors.
"You have pockets of risk aversion generating defensive bids in gold, but then physical buying drops away and if there's an uptick in equities, gold falls back," ICBC Standard Bank analyst Tom Kendall said.
was up 1.06 percent at $1,089.03. U.S. gold futures for February delivery settled up $17.10 at $1,090.70 an ounce, last trading up 1.47 percent at $1089.40
"We have had a good start to the year, with prices trying to consolidate into a higher range between $1,080 and $1,100," ActivTrades chief analyst Carlo Alberto de Casa said.
Bullion hit a two-month high of $1,112 last week as volatility in Chinese stocks raised concerns about the state of the global economy, leaving investors looking for a refuge in gold and other safe havens.
The metal was boosted by a weaker dollar, which fell 0.5 percent against a basket of leading currencies, extending losses after weaker-than-expected U.S. data and making gold cheaper for foreign currency holders.
U.S. retail sales and industrial production fell in December, the latest indication that economic growth braked sharply in the fourth quarter.
"The gold price has moved higher as a consequence which has also been dragging along the rest of the (precious group)," said Guillermo Perez-Santalla of Heraeus Metal Management in a note, adding that the move was "unconvincing."
He added that investment managers did not appear persuaded that the turn around in precious metals prices was here to stay.
The world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares reported steady holdings on Thursday, keeping its total inflow for the year at 11.7 tonnes.
was up 1.18 percent at $13.91 an ounce, but fell 0.59 percent to $488.35 an ounce, heading for a second week of declines after a 12-percent slide last week. fell 1.0 percent to $826.80 and was on track to close the week down nearly 6 percent.