U.S. Treasurys prices also rose, pushing benchmark yields to five-week lows as investors sought a hedge against any market disruptions by intensified fighting in Gaza. Equities prices steadied as Portugal's government and central bank assured investors that the country's financial system was sound despite problems at Banco Espirito Santo.

"We may have Portugal out of the headlines, but we've a lot of geopolitical tensions to contend with, with the Israeli air strikes going on now," said George Gero, gold market commentator and senior vice-president at RBC Wealth Management in New York.

A fourth day of Israeli air strikes on the Gaza Strip killed 11 more Palestinians on Friday, raising the death toll in the coastal enclave to at least 96, most of them civilians, Palestinian officials said.

At 3:20 p.m. in New York, the spot price of gold was up 0.2 percent at $1,337 an ounce, not far from the 3-1/2 month high of $1,345 set Thursday. For the week, it rose 1.3 percent.

U.S. gold futures' most active contract, for August delivery, settled down by a modest $1.80 at $1,337.40.

"For many investors, it is safe havens that are currently in demand," said Peter Fertig, a consultant at Quantitative Commodity Research. "Investors have discovered gold again as an asset class that could provide some protection, after last year they clearly preferred the stocks market and risky assets."

Gold surged on Thursday after Espirito Santo Financial Group, the largest shareholder in Portugal's Banco Espirito Santo, suspended trading in its shares and bonds, citing "material difficulties" at parent company ESI. It was the first significant episode of contagion for European peripheral markets this year, and it curbed demand at Greece's second debt sale following its 2012 default.

On Thursday, holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Shares, had the first outflow since mid-June as some ETF investors took profits after Thursday's rally.

Spot silver was almost flat at $21.38 an ounce Friday, having hit its highest in nearly four months on Thursday at $21.55. It was also up almost 2 percent for the week, its sixth straight week of gains.

Spot platinum was down 0.2 percent at $1,507.24 an ounce, while spot palladium was up 0.3 percent at $869.72, after Thursday's 13-1/2 year high of $875.60x.