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Gold was trading near its highest since October on Friday, on track for its strongest weekly gain in a month as the dollar was pressured by growing doubts the Federal Reserve can stick to its interest rate hike campaign.

Bullion's upward momentum increased this week after a key Fed official said there was a need to consider tighter financial conditions and the weakening global outlook in framing U.S. monetary policy.

Reuters said ‘A shaky global economy has lifted buying interest in gold, making it among the best performing assets with a year-to-date gain of nearly 9 percent. Other precious metals rode on gold's rally, with silver and platinum also at multi-month highs. Silver is eyeing its best week since May last year.’

HSBC analyst James Steel said gold's rally appeared intact.

"We see no compelling reason for more than a normal retracement before bullion resumes an upward move. The rally is underpinned by risk-off sentiment, a weaker dollar and a shift in global monetary policy," Steel said.

Most physical gold buyers in Asia stayed off the market this week as the price surged to its highest since October, widening discounts in India and leaving demand largely lethargic in China ahead of next week's Lunar New Year holiday.

Spot gold climbed as much as $40 an ounce this week to peak at $1,157.20 on Thursday, bolstered by a weaker dollar as doubts grew on whether the U.S. Federal Reserve can raise interest rates this year in the face of a slowing global economy.

"We've only seen moderate buying on the physical side," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers Ltd in Hong Kong.

The week just before the Lunar New Year tends to be a slow period for gold demand in China, with buyers usually securing supplies weeks before the country's biggest festive season.

Traders say, "On Thursday and Friday as trading activity thinned ahead of the week-long holiday."

"If the price remains where they are now, there won't be much physical demand even after the holiday," said William Wong, assistant head of dealing at Wing Fung Precious Metals in Hong Kong.

In India, tepid demand forced dealers to offer discounts of up to $10 an ounce to the global spot, against a discount of $6 last week."People are liquidating stocks they imported at lower price in December. Since demand is weak, they have to offer discounts," said Saurabh Gadgil, vice president of Mumbai-based India Bullion and Jewellers Association (IBJA)."Retail consumers are struggling to adjust with higher prices. They are postponing big purchases hoping the government will reduce import duty in the budget," Gadgil said.

India raised import tax on gold to 10 percent to curtail demand, but it instead boosted smuggling of the bullion. The Indian government will present the annual budget for 2016/17 on Feb. 29.

Reference: Reuters