Gold prices edged up on physical demand and a pause in a dollar rally as investors closely watched for currency signals from the Group of 20 leadership summit that began on Thursday in Seoul.
Spot gold gained 0.3 percent to $1,407.34 an ounce by 0613 GMT (1:13 a.m. ET), off the all-time high of $1,424.10 hit on Tuesday.
A deeply divided G20 struggled to move beyond broad promises of economic cooperation and into thorny issues of exchange rates and trade balances as world leaders gathered in Seoul for a two-day summit.
\"People are looking closely at the dollar. Trade may get a bit choppy today because of uncertainties in the G20 meeting,\" said a Hong Kong-based dealer.
\"Everyone is looking to buy physical gold, instead of holding currency. The second round of quantitative easing in the U.S. just got more people interested in gold.\"
The dollar paused after four straight days of gains, during which gold shook off the dollar influence and scored a new all-time high, as investors fretted over resurgent euro zone sovereign debt woes.
\"Another reason behind gold's strength is the active buying in the physical market in Asia. Scrap supply has increased a bit, but not enough to satisfy the demand for physical gold,\" said Dick Poon, manager at Heraeus in Hong Kong.
Spot silver rose 1.1 percent to $27.51 an ounce. U.S. silver futures gained 2.3 percent to $27.49 after sharp falls in the previous session.
The gold-silver ratio, used to measure how many ounces of silver are needed to purchase one ounce of gold, stood at 51.19, just above 50.92 hit on Tuesday, its lowest since mid-2008 and well under a 28-year average at 64.79.
\"We continue to expect the silver market to be in surplus
this year and in 2011, with investment demand proving to be pivotal for prices,\" said Barclays in a research note.
Holdings in iShares Silver Trust, the world's largest silver-backed exchange-traded fund, jumped more than three percent to 10,718.82 tonnes by Nov 10.
The holdings have risen six percent from a month earlier and 15 percent from two months earlier. In comparison, holdings in the SPDR Gold Trust were little changed from one month earlier, even two months earlier.
Worries about inflation also lure investors to precious metals.
In China, the world's largest gold producer, October's headline consumer inflation hit a 25-month high of 4.4 percent in October, official data showed, above expectations of 4.0 percent.
To combat inflation and reign in excessive liquidity, China's central bank is likely to tighten monetary policy further, said head of Industrial and Commercial Bank of China, the world's biggest lender, after some Chinese banks were asked on Wednesday to raise reserve requirements.
(Editing by Ed Lane)