Gold climbed to a two-month high on Friday, breaching $US960 an ounce for the first time since late March as the US dollar's slide boosted buying of the metal as a currency hedge.
Silver prices posted the biggest percentage gains among precious metals, however, climbing to a nine-month peak of $US14.83 as investors turned to the metal as a cheaper alternative to gold.
Spot gold touched a high of $US961.30 an ounce, the loftiest price since March 20. It was at $US956.75 an ounce at the close in New York, up 0.4 per cent from its late Thursday quote in New York at $953.40 an ounce.
US gold futures for June delivery settled up $US7.70 at $US958.90 an ounce on the COMEX division of the New York Mercantile Exchange.
Simon Weeks, director of precious metals at the Bank of Nova Scotia, said the majority of gold's gains were dollar related, with investors "buying hard assets as opposed to hard currency."
"Physical (buying) has been OK, but I expect a big increase in the open interest on the long side on the COMEX," he added.
Exchange data showed that COMEX gold open interest rose sharply for a second straight day as of May 21, closing in on 400,000 lots.
The dollar continued its slide on Friday, with the euro trading above $US1.40 for the first time since early January, as fears over US sovereign ratings accelerated a drive away from the unit.
Ratings agency Moody's Investor Services said on Thursday it was comfortable with its US rating of AAA but that it was not guaranteed forever, while Standard & Poor's cut its outlook on Great Britain to negative from stable.
Bullion is also technically well positioned to make further gains, according to analysts.
Stronger oil prices, which hovered around their six-month peak, also supported gold. Bullion can be bought as a hedge against oil-led inflation, while rising crude prices can also boost interest in commodities as an asset class.
Investor interest in gold-backed exchange-traded funds remained relatively lackluster, however. Holdings of the largest gold-backed ETF, the SPDR Gold Trust, were unchanged for a sixth consecutive session on Thursday.
London's ETF Securities noted an outflow from their Physical Gold ETF. Its holdings declined nearly 69,000 ounces, or 2.5 per cent, on Thursday.
Among other precious metals, silver jumped to a fresh nine-month high on Friday, also benefiting from dollar weakness. The metal has risen more than 5 per cent so far this week. Spot silver was at $US14.67 an ounce, up 1.1 per cent from its previous finish of $US14.51.
Strong ETF buying has been a key factor boosting silver prices in recent weeks. ETF Securities' silver holdings were at a record 19.462 million ounces on Thursday.
Platinum at $US1152.00 an ounce, up 0.3 per cent from its late Thursday quote of $US1148.50, while palladium was at $US231.00 an ounce, essentially unchanged from its previous finish.
