Gold bounced back and forth on Friday, reflecting a thin market ahead of the year-end, and a firm US dollar is likely to encourage more investors to unwind their positions.

Spot gold rose as high as $628.20 an ounce (oz), hit a low of $624.60 and was at $625.20/626.70/oz by 04:02 GMT, down slightly from $626.00/627.50 late in New York on Thursday.

Gold has fallen steadily since rallying to a 16-week high of $649.50 on December 1 as players locked in profits ahead of the Christmas and New Year holidays. The metal was trading well below the 26-year high of $730/oz hit in mid-May.

A dealer in Singapore said: "I think a lot of people are bit long, that's why gold doesn't move much even though oil is getting higher.

"But I guess everybody knows there's going to be year-end book squaring. They want to keep gold below $650 until the end of this year, and you may see some selling-off. For me, $610 will be a good support and I don't think gold will cross $650."

The euro hardly moved at $1.3145 while the dollar edged up to ¥117.95 from around ¥117.85 in New York after the Bank of Japan's tankan survey showed improved business sentiment but failed to alter expectations the BOJ will keep interest rates on hold next week.

The dollar had gained in the US market on Thursday after strong US jobless data strengthened the view the Federal Reserve may not have to cut interest rates just yet to stimulate the economy.

The US government said the number of people claiming initial unemployment benefits last week fell more sharply than economists had expected.

US crude oil futures extended gains to hover above $62 a barrel on Friday after rising more than $1 a day earlier on the back of an Opec decision to cut more production from February.

The physical sector saw light buying at lower levels in the past few days, which helped push up premiums for gold bars to 30USc/oz to the spot London price in Hong Kong from 10c last week.

"There's a little bit of buying," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, adding that gold would be stuck between $620 and $635 until the Christmas holiday was over.

"There's position squaring ahead ... More players will leave the market," he said.


Platinum dropped to $1 104/1 109/oz from $1,108/1,118 late in New York.

Silver edged down to $13.75/13.80/oz from $13.76/13.83/oz in New York.

Palladium at $326/331/oz.