But prices would have to move above $1,200 an ounce for speculative investors who have built large bets on lower prices to be shaken from their positions, he added.
"The bears who have been in control for weeks or even months have no reason to worry," he said.
Spot gold was up 0.1 percent at $1,185.64 an ounce at 1245 GMT after Thursday's dip to $1,159.96, the lowest since January 2017.
U.S. gold futures were up 0.7 percent at $1,192.20 an ounce.
"Value-buying in this oversold territory is highly likely to underpin gold prices," Religare Securities analyst Sugandha Sachdeva said. Lower prices are sparking a revival in demand for physical gold in Asia.
But downward pressure from speculators remains strong.
Bets on lower prices by hedge funds and money managers on the Comex exchange continue to build and outweigh bets on higher prices by 77,273 lots, the largest quantity ever recorded.
Holdings of gold backed exchange traded funds, meanwhile, have fallen by 4.1 million ounces, or 7 percent, since late May as investors exited positions.
Technical and momentum indicators suggest gold will fall towards support at its January 2017 low of $1,146.20, said analysts at ScotiaMocatta. Fibonacci resistance was at $1,185.30, they said.
Investors were looking ahead to Friday and a speech by U.S. Federal Reserve Chairman Jerome Powell at a conference in Jackson Hole in which he might give clues about the pace of U.S. interest rate rises, analysts said.
Any display of caution about rate rises could push the dollar lower and give gold a leg up.
In other precious metals, spot silver was down 0.5 percent at $14.69 an ounce after hitting its lowest since February 2016 last week.
Platinum rose 1.5 percent to $793.50 an ounce but remained close to its lowest in a decade, while palladium, XPD= , which last week traded at its weakest since July last year, was up 0.6 percent at $916 an ounce.
(Additional reporting by Nallur Sethuraman in Bengaluru Editing by Edmund Blair) ((Peter.Hobson@thomsonreuters.com; +44 207 542 0083;))