The most-actively traded contract, for April delivery, settled up $3.50, or 0.3%, at $1,388.60 per troy ounce on the Comex division of the New York Mercantile Exchange.
The thinly traded February-delivery contract settled up $3.50, or 0.3%, at $1,388.20 per troy ounce.
China's move to raise bank reserve requirements by 0.5 percentage point for the second time this year pressured gold futures Friday. The decision aims to constrict credit availability to the Chinese economy by making banks set more capital aside for existing loans. Chinese authorities have been drawing the purse strings since inflation rates hit a two-year high of 5.1% in November.
"The market is weighed down by the Chinese reserve rate rise," said Jim Steel, senior vice president and metals analyst with HSBC in New York. But "it's not enough to offset all the other factors supporting gold."
China last raised reserve requirements Jan. 20, while the People's Bank of China raised benchmark interest rates by 0.25% on Feb. 8. Such moves tend to trim gold prices, as easing inflation concerns curb investor demand for safe-haven assets like gold.
Gold futures resumed their upward march in Friday afternoon trade, as market participants eyed simmering tensions in the Middle East. Egypt allowed two Iranian warships to pass through the Suez Canal on Friday, while Israel had earlier described Iran's move as a "provocation." Meanwhile, violent clashes between security forces and pro-democracy protesters in Yemen and Bahrain underscored the rising political instability in the region.
"The market is being supported by a bit of uncertainty," said Ralph Preston, analyst with Heritage West Financial.
Gold's recent gains have some market participants gearing up for a test of records. Gold futures crossed above their 50-day moving average of $1,372.40 earlier this week, a sign technical traders and algorithms consider a positive signal for prices.
"Today's positive close has set the stage for a challenge of the all-time high next week," Preston said.
Silver prices ended Friday at 31-year highs amid strong industrial and investment demand for metal.
The most-actively traded contract, for March delivery, settled at $32.296 per troy ounce, up 72.6 cents, or 2.3%. This was the highest settlement price since 1980, when the Hunt brothers of Texas attempted to corner the silver market.
Silver's recent price gains, however, stem from robust industrial demand for the metal. Silver is widely used for electrical and electronic applications in everyday consumer devices like smartphones and solar-power panels. The precious metal also plays a key role in manufacturing polyester.
"The strength of industrial demand has tended to surprise to the upside, and that's part of prices escalating to where we are today," said Philip Klapwijk, chairman of metals consultancy GFMS.
Investment demand for silver has also been on the rise. Major physical-silver exchange-traded funds are seeing investors return after strong redemptions in January, while the U.S. Mint sold 6.4 million 1-ounce American Eagle coins in January, nearly double the 3.6 million coins sold a year earlier.
"Demand for silver coins has been nothing short of spectacular since the first of the year, and it's been going on for longer than that," said Michael Haynes, chief executive of American Precious Metals Exchange, a large bullion and precious coins dealer. "To some degree, people see silver and gold moving parallel, and because of its price point, people see that they can acquire 10 ounces of silver for less than a single ounce of gold."
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