| NEW YORK
NEW YORK Gold rose on Friday, reclaiming $1,100 an ounce as a euro rally on a Greece aid deal boosted investor sentiment, and the market is expected to take trading cues from the currency market.
The metal ended the week nearly flat after Friday's gains, whipsawing between safe-haven demand driven by sovereign debt worries and a resurgent dollar due to euro's weakness.
"The day's focus is on the dollar. Any good news out of Europe is going to weaken the dollar, and the commodities react positively to that," said Jeff Pritchard, a trader at broker-dealer Altavest.
In the past two weeks, gold at times showed it can trade regardless of dollar movements, as uncertainties about currencies triggered flight-to-quality demand. Analysts expected the metal's inverse link with the dollar could weaken.
"The gold market has been trading sideways in the past two months. Until it finds a trend, some days you will see that disconnect between the U.S. dollar and the gold market," Pritchard said.
Spot gold was at $1,102.75 an ounce at 1:44 p.m. EDT, against $1,090.35 late in New York on Thursday.
U.S. April gold futures on the COMEX division of the NYMEX settled up $11.40, or 1 percent, at $1,104.30.
Short-covering ahead of the weekend following April option expiration on Thursday triggered buying, COMEX futures traders said.
Geopolitical tensions also lent support to bullion, after a South Korean naval ship sunk in waters near a contested sea border with North Korea.
Gold was also boosted as the euro rallied after euro-zone leaders agreed an aid package under which Greece would receive both bilateral loans from euro-zone partners and funding from the International Monetary Fund if it faced severe difficulties.
Earlier in the session, gold fell as a government report showed the U.S. economy grew at a slightly less brisk pace in the fourth quarter, diminishing the metal's inflation hedge appeal.
Gold market participants are now digesting information after the U.S. Commodity Futures Trading Commission held a day-long hearing to consider whether limiting metals speculation could irreparably harm markets.
RESURGENT ETF DEMAND
Better sentiment among bullion investors was evident as gold exchange-traded funds reported inflows.
Holdings of the world's largest gold-backed ETF, New York's SPDR Gold Trust, rose 4.568 tonnes on Thursday to 1,124.647 tonnes, their highest since January 5. It rose by the same amount on Tuesday.
"An increase in ETF holdings showed gold still attracted investors as currencies remained volatile," said Richcomm Global Services in a note.
In Asia, jewelers chased gold bars after bullion prices dropped more than $10 this week, while main consumer India was stocking up as the wedding season begins again in April, dealers said on Friday. <GOL/AS>
Gold has seen good physical demand emerging as prices declined below $1,100 an ounce, dealers said, helping put a floor on prices.
Silver was at $16.82 an ounce against $16.56, platinum was at $1,595 an ounce versus $1,597 and palladium at $455 against $450.50.
(Additional reporting by Jan Harvey in London)