Gold climbed to $1,068.50 (+0.33%) following gains in the previous session amid a softer dollar and weaker stocks. However gains are limited due to concerns that higher interest rates in the U.S. will hit demand for the non-interest-paying precious metal. The Federal Reserve is likely to raise rates further in 2016.

Assets in SPDR Gold Trust, the biggest gold-backed exchange-traded fund in the world, climbed 2.98% to 648.92 tonnes on Friday, marking the first increase in two months.

Physical demand may improve in China in a couple of weeks due to the Lunar New Year celebrations in February.