Gold rose for a second day on Thursday as the U.S. dollar held near a 16-month low against a basket of currencies.
The precious metal held within $20 of the record high of $1,476.21 an ounce struck at the start of the week, with declines in exchange traded fund holdings suggesting investors are keen to book profits.
A dip from all-time highs would spur purchases from jewelers in Asia. Worries about inflation ensured steady demand from China, which will release inflation data on Friday that will offer clues on Beijing's next policy move.
"Gold could be supported by the weak dollar and the loose monetary policy from the Federal Reserve," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore. "For Asian buying, it may resurface upon dips in prices.
Chinese demand for gold is expected to remain strong. Amidst rising inflation and a lack of investment alternatives, gold is sought as a store of value."
The dollar held near the previous day's 16-month low against a basket of currencies as mixed U.S. data did nothing to change the view that the Fed would stick to its super-easy monetary policy.
"There's steady buying from China. They don't seem to be affected by the price movements. I think the government still encourages people to buy gold instead of property," said a dealer in Hong Kong, referring to Beijing's move to rein in the red-hot property sector.
"Silver is in good demand from India. Maybe because the price of gold is too high, and they turn to silver. Demand started to appear two weeks ago."
"Prices are extremely high, currently, so perhaps it could take a breather," said a dealer in Singapore. "But if gold goes up, silver is likely rise as well. I continue to look for silver taking its cue from gold."
Shares Silver Trust said its holdings slipped to 10,969.71 tonnes by April 13 from 11,212.53 tonnes on April 12, and a record of 11,242.89 tonnes hit on April 8.
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