Gold rose as lower European shares boosted demand for assets perceived as safe, but the metal looked set to post its third straight weekly loss, weighed down by a strong dollar.

Spot gold was up 0.3 per cent to $1,185.70 an ounce by 1018 GMT. Liquidity was thin in post-holiday trading, with Chinese and Japanese markets closed on Friday. Prices were heading for a 0.8 per cent weekly decline, the third straight week of losses.

US gold futures for delivery in February were up 0.1 per cent at $1,185.40 an ounce.

Bullion ended 2014 down nearly two per cent, following a 28 per cent slump the previous year.

Anticipated US interest rate hikes and a recovering economy may strengthen the dollar's appeal in 2015. Higher rates weigh on non-interest-bearing bullion, while a stronger dollar makes gold more expensive for holders of foreign currencies.

"An almost unchanged gold price in 2014 was quite impressive considering that we had a 12-percent rise in the dollar during the same time," Saxo Bank senior manager Ole Hansen said.

"But as long as we continue to see expectation for a rising dollar, investors will not start to suddenly look at gold as an investment opportunity against that kind of outlook."

The dollar rose to its highest level in nearly nine years, up 0.4 percent against a basket of six major currencies, mostly on a lower euro, which hit a 4-1/2 year low after the European Central Bank fanned expectations it would take bolder steps on monetary stimulus later this month.

Gold was being supported by lower European equities after subdued manufacturing data from the eurozone and muted trading.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.25 per cent to a fresh six-year low of 709.02 tonnes on Wednesday. Redemptions in 2014 reached 140 tonnes, well below the 460-tonne outflow seen in 2013.

Silver rose 0.9 per cent to $15.80 an ounce, after posting a 19.3 per cent decline in 2014, and platinum rose 0.2 per cent at $1,205.25 an ounce, having fallen 12 per cent last year. With an 11 per cent jump, palladium was the best performing precious metal in 2014, mostly on supply concerns from top producer Russia. Prices were up 0.8 per cent at $794.50 an ounce. - Reuters