Spot gold was last quoted at $284.10/$284.60, compared withthe New York close at $284.40/$284.90.

Dealers said gold was likely to test resistance at $285 later in the day ahead of the expiry in COMEX options, which sparked short covering on Thursday. Bullion prices also firmed on short covering ahead of theU.S. Long weekend, with markets closing early on Friday and remaining closed for the Martin Luther King holiday on Monday.

But analysts and dealers said with Britain's fourth goldauction due to take place on January 25, participants might not want to push prices too high. "Prices look set to retest the $285.00 level today, however,post option expiry gold may well head back down towards $282.00 with market participants reluctant to push prices too high ahead of the fourth Bank of England gold auction," said N.M. Rothschild & Sons treasuryanalyst Helen McCaffrey.

Bullion dealers said a break of $285.00 was necessary ifgold was to move higher. "Gold needs to break $285.00 and soon if it is to continueupwards, otherwise it may come all the way back to $279.00 again," one dealer said.

Metals traders Standard Bank London said in a report on itswebsite (www.standardbank.com) that dealers would have been encouraged by gold's ability to hold above $280.00 with physical lending support on the downside. Silver remained steady and was last quoted unchanged at$5.10/$5.13.

Dealers said fears of Chinese sales still hung over thesilver market. Standard Bank said good buying interest had emerged between$5.00 and $5.10. "The funds look to be pinning their bearish view on thepossibility of Chinese silver flooding the market while the buyers seem to be more diversified, ranging from technicians to physical buyers and industrial users," Standard Bank said.