By Stephanie Yang

Gold prices rose in quiet trade on Friday, as investors covered short positions ahead of an extended holiday weekend.

Gold for February delivery was recently up 0.3% at $1,134.20 a troy ounce on the Comex division of the New York Mercantile Exchange.

Investors have turned against the precious metal as optimism over economic growth and higher interest rates have deterred its appeal. With thin trading on Friday, investors buying gold to close out bearish positions were able to propel the market higher, said George Gero, managing director at RBC Wealth Management.

"Mostly it's light volume and evening out [positions] for the holidays," Mr. Gero said.

As markets have climbed to record highs following the U.S. presidential election, investors have dumped safe-haven gold and favored riskier assets on expectations for growth.

The Federal Reserve raised short-term interest rates in December, which has also weighed on gold in recent weeks. Central bank officials indicated plans to raise rates another three times in 2017. Higher rates tend to hurt gold, since the metal pays its holders nothing and struggles to compete with yield-bearing assets when borrowing costs rise.

However, Mr. Gero said the prospect of higher rates may already be priced into the market in the near term. "It looks to me like the market has already discounted the next interest rate increase," he said.

Write to Stephanie Yang at

(END) Dow Jones Newswires

December 23, 2016 10:58 ET (15:58 GMT)

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