This week, investors expect the European Central Bank to unleash more stimulus, while next week the Fed is seen cutting rates again. Spot gold was up 0,2 percent at $1,509.01 per ounce. In the previous session, prices fell to their lowest since August 13 at $1,483.90.
Gold prices may rally to a record above US$2,000 an ounce in the next two years, according to Citigroup Inc., which gave a laundry list of positive drivers including rising risks of a global recession and the likelihood that the Federal Reserve will reduce USA interest rates to zero.
The U.S. Federal Reserve will continue to act "as appropriate" to sustain the economic expansion in the world's biggest economy, Fed Chair Jerome Powell said Friday in Zurich, sticking to a phrase that financial markets have read as signaling further interest-rate reductions ahead.
Bullion prices have shed more than 4 per cent, or over $60, since scaling an over six-year peak of $1,557 on September 4.
"For now, the US consumer and potential growth story is holding up", Citi said in the note.
Fundamental backdrop is still broadly gold-supportive considering the main sources of risk aversion remain unresolved, Spivak added.
"Gold has been retreating because of risk appetite returning to the market, so the concerns (over US-China trade ties and global growth) seem to be subdued", Commerzbank analyst Eugen Weinberg said. "That probably encourages central banks to remain dovish".
Gold bullion is now near a six-year high as private traders have plowed into the haven.
On the technical side, spot gold is expected to test a support at $1,497 per ounce, a break below which could cause a further fall to $1,453, according to Reuters technical analyst Wang Tao.
Meanwhile, the dollar was steady against a basket of major currencies.
Elsewhere, silver eased 0.1% to $18.14 per ounce after falling to a near two-week low of $17.89 earlier in the session.
Palladium was up 0.3 per cent at $1,566.28 per ounce, while platinum climbed 1.2 per cent to $941.35.