Gold prices are moderately higher in early trading Friday, on short covering after recent selling pressure and amid a lower U.S. dollar index that hit a fresh three-week low overnight. April gold was last traded up $8.50 an ounce at $1,116.70.

Gold traders on Friday morning will closely scrutinize a batch of fresh U.S. economic data, including retail sales, the Reuters/University of Michigan consumer sentiment index and business inventories. How the U.S. dollar index reacts to the latest U.S. economic data is likely to determine the price action in precious metals Friday.

Spot gold in Europe was higher Friday as the Euro currency posted a fresh four-week high against the U.S. dollar. European traders said a technically bullish weekly high close in the Euro currency on Friday would also give the gold market an upward boost.

In overnight trading, the London A.M. gold fix was $1,118.75 versus the previous afternoon fixing of $1,104.00. The London silver fixing was $17.31 an ounce, versus $16.91 the previous trading session.

In overnight news, reports said South Africa's gold output declined 5.8% on the year, to 204,922.8 kilograms, the country's Chamber of Mines said Friday. South Africa is now the four-ranked world gold producer, behind China, Australia and the U.S.

Technically, April Comex gold's rally on Friday keeps in place a five-week-old price uptrend on the daily bar chart. Gold market bulls were also encouraged Thursday by the ability of April futures prices to hold above solid technical support at $1,100 an ounce. For April gold, shorter-term technical resistance is seen at $1,125.00 and then at  $1,128.30. Buy stops likely reside just above those levels. Sell stops likely reside just below shorter-term support at the overnight low of $1,108.30 and then at $1,103.10. Today's key near-term Fibonacci pivot level for April gold: $1,117.00.

Comex silver futures are higher in early trading Friday. May silver last traded up 15.5 cents an ounce at $17.315. Prices remain in a five-week-old uptrend on the daily chart. Silver bulls maintain the near-term technical advantage. May silver finds shorter-term technical resistance at $17.40 an ounce, and then at $17.53. Buy stops likely reside just above those levels. Shorter-term technical support for May silver is located at the overnight low of $17.11 and then at $17.00. Sell stops are likely placed just below those levels. Today's key Fibonacci pivot level for May silver futures is located at $17.15.

By Jim Wyckoff, contributing to Kitco News; jim@jimwyckoff.com