Spot gold prices rose above $693 per ounce early in New York on Friday, holding that new 11-month high against the Dollar well past the London close.

Versus the other major currencies, the bounce begun from key levels late on Thursday took gold nearly 1.8% higher for Sterling and Euro investors.

By the end of London trade, gold was priced above £345 and €508 per ounce, also up for the week as a whole.

Friday's solid move higher came on a thin day for economic news.

Only the UK saw a major data release. It pointed to slower than expected retail sales in March.

That news temporarily knocked Sterling from its 26-year peak versus the Dollar above $2.01.

But the Pound rose again as traders noted that the retail sales deflator – a measure of High Street prices – in fact rose at its strongest rate in six months.

(Is the Bank of England now caught, just like the Fed, between a rock and hard place? Click here for more...)

"The gold rally is based on the idea that you are going to see persistent inflation driven by the economic growth in China," reckons Daniel Vaught, a commodity analyst at A.G. Edwards in New York.

Gold futures for June delivery rose at the US open as high as $698 per ounce. Tokyo gold futures closed the week up at the equivalent of $696 per ounce.

"Gold has been moving in virtual lockstep with the Chinese stock market since February," says Vaught, referring to Thursday's sudden sell-off in Chinese stocks and bullion.

"There's still a lot of expectations for extremely strong growth in Asia, especially out of China and India." (Read more about India's impact on the gold market here...)

Short-term – and despite yesterday's set-back – "the metal remains at the moment in an up-trend," notes Wolfgang Wrzesniok-Rossbach for Heraeus, the giant German metals refinery.

"A healthy level of cautiousness [now] prevents the market from overheating for the time being.

"Bullion traders in Germany report a relatively good demand in form of bars and coins, however we have observed this week a strong inflow of scrap.

"On balance, however [this] certainly more than neutralises the sales seen elsewhere."

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