Just a week after their first red carpet appearance together since they decided to take a break from their marriage last summer, the longtime couple stepped out again – this time on Monday night at the 14th annual Monte Cristo Awards honoring Meryl Streep in New York City.
It’s the latest sign that the couple, who are parents to son Dylan, 13, and daughter Carys, 11, may be working toward reconciliation.
Reps for the couple have declined to comment on whether they are back together, but a longtime family friend tells PEOPLE, “Things seem to be going really well for them. I knew they were going to work as hard as they could on their marriage, especially for the kids. It’s a good thing.”
The Oscar-winning couple walked the red carpet, smiling for photos with each other and with Streep, who was honored with the Eugene O’Neill Theater Center’s annual award. (Douglas won the award in 2012.)
During dinner, the couple sat next to each other, chatting with Streep, listening – and laughing – as she accepted the award, saying, “I feel like I’m at the funeral, so I’m really happy! You usually don’t get to be there!”
“They looked really happy to be together,” one observer told PEOPLE.
In October, Douglas, 69, said on The Tonight Show that he and Zeta-Jones, 44, were on “a little bit of a break,” telling former host Jay Leno, “I’m very hopeful.”
Next Monday, they are expected to go together to the Film Society of Lincoln Center’s Gala Honoring Rob Reiner with the 41st Annual Chaplin Award.
• Reporting by SHARON COTLIAR