Gold drifted lower on Friday as investors took profits from record highs, but sentiment remained bullish on firm oil and expectations of further dollar weakness.
Platinum set a historic high before easing, but the metal was seen supported by positive fundamentals. The market was expected to close the current year in deficit on concerns about supply from South Africa, the world's largest producer.
Analysts said the gold market was preparing ground to march towards the next big number of $1,000 an ounce this year, but the upward journey was likely to witness pockets of pullbacks.
"In the near term we see further price appreciation. Today's U.S. payrolls data is going to be quite important and probably gold will trade in a narrow range until then," said Suki Cooper, precious metals analyst at Barclays Capital.
"If you see more safe-haven buying on the back of credit market concerns or geoplolitical tensions, then that could spark prices higher in the short term," she added.
Spot gold fell to $857.80/858.50 an ounce after rising as high as $866.80, against $862.90/863.60 late in New York on Thursday, when it hit a record high of $869.05.
The dollar edged up from the previous day's one-month lows as investors squared positions ahead of a keenly-watched payrolls report due at 1:30 pm London time.
The data could provide clues on how much the U.S. Federal Reserve may cut interest rates this month amid growing worries about a slowdown in U.S. economic growth.
A firmer dollar makes gold costlier for holders of other currencies and often lowers bullion demand. The metal is also generally seen as a hedge against oil-led inflation.
Oil eased but traded not far from a record rally that propelled crude prices to over $100 a barrel this week.
"Given the recent price surge, gold is vulnerable to profit taking. However, with no improvement in the volatile geopolitical backdrop and likelihood of further dollar weakness, we remain bullish towards gold and expect a push towards $900 in the coming sessions," TheBullionDesk.com said in a daily note.
Investment funds have flocked to gold, which jumped more than 30 percent in 2007, as a hedge against concerns that fast-rising oil and food prices will fire up global inflation.
In other bullion markets, U.S. gold futures fell in electronic trading, with the most-active February contract was down $8.6 at $860.50 an ounce.
Japanese gold futures fell on their first trading session of 2008, as a sharply stronger yen against the dollar weighed on prices. The benchmark December 2008 contract on closed down 0.2 percent at 3,055 yen a gram from 3,060 yen on Dec. 28.
In other metals, platinum hit a record high of $1,553 an ounce before falling to $1,545/1,550, against $1,550/1,555 in New York.
Fundamentals for the metal would stay bullish amid concerns over supplies. Disruptions in South Africa, the world's top producer, are likely to leave a supply deficit again this year, analysts said.
Palladium rose $1 to $370/374 an ounce from $369/$373 in New York, while silver fell to $15.20/15.25 an ounce from $15.35/15.40.