On Friday, gold prices were still favourable even as risk appetite among investors improved after the long-awaited US-China Phase 1 trade deal.
On MCX, gold futures closed 0.66 percent higher on Friday at Rs 39,946 per 10 grams. In the international markets, spot gold climbed 0.3 percent higher to $1,557.12 per ounce, while US gold futures rose 0.4 percent to $1,557.12.
Stock markets see new highs
Gold prices traditionally decline when riskier assets like equity are favoured by investors.
This week, stock markets around the world hit record highs after the US and China signed the "phase one" of their trade deal on Wednesday, which helped aid revive business confidence along with positive quarterly corporate result announcements.
Australian shares touched fresh all-time high for a fourth consecutive day on Friday when benchmark &P/ASX200 index touched 7088.1.
In the US, Dow Jones Industrial Average rose 0.17 percent to 29,348 while the S&P 500 index gained 0.39 percent to 3,329.62 and the Nasdaq Composite index was up by 0.34 percent to 9,388.94.
Similarly, in Europe, Stoxx Europe 600 rose close to 1 percent to 424.90 and Hong Kong stocks posted their seventh straight weekly gain on Friday.
In India, BSE's Sensex breached 42,000 level for the first time to touch 42,063.93 and NSE's Nifty 50 rose to 12,385.45.
Interest in gold subdued but steady
The clear optimism in the stock markets around the globe partially hurt gold prices, keeping them in a range of about $1,550-$1,580 an ounce. The metal is seeing its biggest weekly drop in two months, however, gold buying continues.
Experts say that continued interest in the safe-haven metal shows that political, geopolitical and economic worries globally haven't diminished. Additionally, analysts remain nervous on the Phase 1 deal that failed to address tariffs and some important core issues that the US had with China.
Other precious metals also gain
Palladium had an eventful week. Spot palladium rose relentlessly throughout the week to hit a record peak of $2,537.06 after surging as much as 16 percent. It was the best week for the metal since December 2001.
Last year, sustained supply constraints and expectations for stricter emission laws around the globe helped the metal's prices rise over 50 percent.
Palladium is primarily used by automakers for catalytic converter manufacturing to clean car exhaust fumes.
The US-China trade deal this week helped boost prices further due to optimism on economic growth.
Further, South Africa on Thursday released data showing that its output of platinum group metals including palladium fell by 13.5 percent in November when compared to the same month in 2018. The country produces two-fifths of the world's mined palladium.
Silver futures on MCX were up by 0.72 percent to Rs 46,756/kg. In the international market, silver rose by 0.3 percent to $18 an ounce.