"A stronger rupee since the beginning of the year is helping to offset the high price of gold in U.S. dollar terms," said James Steel, analyst at HSBC. The recent week-long rally in the gold price could "reduce buying to a trickle," warned Moffatt, but he noted solid demand from other Asian countries like Thailand as well as coin demand from the U.S. and Europe. Despite U.S. headlines taking front and center stage Friday, Jon Nadler, senior analyst at Kitco.com, said he still thinks that Europe is the biggest factor moving gold. "Europe is showing all the signs that the credit contraction is under way," said Nadler, who is worried about a prolonged recession. "I would certainly want to see some real strong steps out of Europe before I would take on more risk again and buy more stocks and gold and so on." If gold can surpass $1,803-$1,805 on a closing basis, gold would be "poised for new highs," said Nadler. But he is more concerned about "mattress money scenarios" where people stop buying all assets as risk appetite dies out altogether in an event of a steep global slowdown. Gold mining stocks were weaker Friday. Kinross Gold ( KGC) was down 1.68% to $11.20 while Yamana Gold ( AUY) was shedding more than 3% at $17.14. Other gold stocks, Agnico-Eagle ( AEM) and Eldorado Gold ( EGO)were trading significantly lower at $36.36 and $14.70, respectively. -- Written by Alix Steel in New York. >To contact the writer of this article, click here: Alix Steel. >To follow the writer on Twitter, go to http://twitter.com/adsteel.