Gold rebounded to a fresh three-week high on Friday, as investor risk aversion lifted appetite for the metal, putting it on track for a second straight weekly rise.
Often perceived as an insurance against economic and financial concerns, gold has risen more than 2 percent this week after weaker than expected U.S. payrolls data dented expectations of an imminent rise in U.S. interest rates.
Prices are likely to be bolstered in the next two weeks by nervousness over Britain's June 23 referendum on its EU membership, analysts said.
"The market is no longer worried that the Fed will raise rates next week and investors are more concerned about the UK referendum, which is likely to help increase demand for gold," Danske Bank senior analyst Jens Pedersen said.
Spot gold XAU= rose as high as $1,277.70 an ounce, its highest since May 18, and was up 0.4 percent at $1,273.21 an ounce by 2:08 p.m. EDT (1808 GMT). It was negative earlier.
U.S. futures for August delivery GCv1 settled up 0.3 percent at $1,275.90 an ounce.
Spot silver XAG= touched a 3-1/2-week high at $17.37 an ounce earlier in the session and was up 0.1 percent at $17.30 an ounce. It was on track for its biggest weekly gain since April, up 5.5 percent.
"If the Fed restrains from raising rates in June and July and doesn't give a precise guidance, then that should support gold, also because the dollar would weaken," Commerzbank analyst Daniel Briesemann said.
Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.
Gold rebounded despite a stronger dollar, as global shares dropped, and 10-year yields in Germany, Japan and Britain all struck record lows. [MKTS/GLOB]
"While we still expect the Fed to raise rates twice this year, the market is increasingly discounting this possibility," said ANZ Research in a note, adding that it expects gold to resume its bull cycle.
"The backdrop of easing monetary policies, negative bond yields, and a likely pause in U.S. dollar appreciation should also be supportive. This should negate some lacklustre physical demand in Asia."
Holdings in SPDR Gold Trust (GLD), the world's largest gold-backed exchange-traded fund, rose 0.7 percent to 887.38 tonnes on Thursday, the highest level since October 2013.
Among other precious metals, platinum XPT= fell 0.7 percent to $991.40 and palladium XPD= was down 2.8 percent at $542.50.