Gold prices edged up on Thursday as well-received Chinese manufacturing data and hopes that a bailout deal for Greece may eventually be agreed boosted stocks and lifted the euro to three-week highs versus the dollar.
Prices held in a tight range, however, with trading activity expected to be light because of the US Thanksgiving holiday, which has closed Wall Street.
Spot gold was up 0.06 percent at $1,729.56 an ounce at 1205 GMT, while U.S. gold was up 0.09 percent at $1,729.70.
The single currency broke higher and world stocks extended a week-long rally as manufacturing surveys in China and the United States boosted confidence over the growth outlook, while euro zone data was not as weak as some had feared.
A report showed China's manufacturing Purchasing Managers Index rose to a 13-month high of 50.4 in November, while euro zone data showing manufacturing activity slowed less than expected in November.
"Gold is 'risk on' - equities are higher and the dollar is a tad weaker. (But) the market needs a driver to break it above USD 1,740," Saxo Bank vice president Ole Hansen said.
He said the better than expected data from China could augur well for demand from the country, which has vied with India as the world's biggest gold consumer this year, but whose gold buying has proved fragile in the face of slowing growth.
"If there is a belief that China has turned the corner, there could be more physical demand," he said.
Gold prices have held a much closer correlation this year than last to assets seen as higher risk, like equities, the single currency and other commodities, as the dollar has taken over as investors' haven of choice.
Gold's 11 percent rise this year has come largely on the back of US monetary easing measures to boost its economy. It has been hovering around USD 1,730 this week as investors focus on whether the United States will avoid a fiscal crisis.
"The gold market is likely to trade sideways unless you get clear news from the US on the fiscal cliff," Nic Brown, analyst with Natixis, said, referring to USD 600 billion in tax hike and spending cuts that are due to roll in early next year.
Federal Reserve chairman Ben Bernanke on Wednesday repeated a warning that failing to avert a move towards the cliff could lead to recession, and said worries over how budget negotiations will be resolved were already damaging growth.
Investors said resilient Indian and Chinese gold demand underpinned prices.
Ross Norman, chief executive of precious metals trader Sharps Pixley, said Indian physical demand for gold had been better than expected this year, despite an increased gold import duty and a weak monsoon. A poor monsoon can erode farmers' earnings and gold purchases in the world's top consumer.
"There are some fresh longs coming into the market on the basis of physical demand in gold," he said.
Silver rose to USD 33.43 an ounce, its highest in more than a month, before easing back to USD 33.28, down 0.15 percent. Silver has risen more than 20 percent this year, leading precious metals.
Silver's ratio to gold, which measures the number of silver ounces needed to buy an ounce of gold, held near the six-week low it hit on Wednesday at 51.86 after silver outperformed.
"The ratio should head towards the less steep rising channel support at 50.90/60, or even all the way back to the low of last February at 48.50," Societe Generale said in a note.
Silver usually tracks moves in gold, but can also be influenced by riskier assets due to its industrial nature.
Holdings of the largest silver-backed exchange-traded fund, New York's iShares Silver Trust, dipped 0.15 percent on Tuesday.
ETFs issue securities backed by physical stocks of a precious metal, and have proved a popular way to invest in gold and silver in recent years.
Platinum edged up 0.48 percent to USD 1,581.25, while palladium was last at USD 651.75, up 1.6 percent.
