Gold rose more than one percent to a near three-week high on Wednesday, bolstered by a weaker dollar on declining expectations that the U.S. Federal Reserve will raise interest rates any time soon.
Investors have almost priced out the chance of a rate increase at the Fed's June 14-15 policy review, and see the likelihood of a July rate hike reduced to around 26 percent since disappointing jobs data last week and comments by Fed Chair Janet Yellen on Monday.
Spot gold rose 1.3 percent to $1,259.85 an ounce earlier, its strongest since May 20 and was up 1.1 percent at $1,258.13 by 1306 GMT.
U.S. gold climbed 1.35 percent to $1,263.30.
"Gold could easily see a further $20 an increase, given favorable macroeconomic news, but only a break above $1,290 would encourage new demand to come in," MKS SA head of trading Afshin Nabavi said.
Gold's gains lifted the rest of the precious metals, with silver hitting $17 an ounce for the first time in three weeks, up four percent. Palladium also touched a three-week high at $563.80, while platinum marked its highest in two weeks at $1,019.58 an ounce.
"We know the Fed wants to carry on normalizing monetary policy but they won't ... if the economy is actually slowing," Macquarie analyst Matthew Turner said.
"So we are once again dependent on the next non-farm payrolls data, which is however not going to be out for another four weeks," Turner said.
He expects the Fed at its June meeting to reiterate Yellen's message on Monday when she gave a largely upbeat outlook for the U.S. economy but did not specify whether the Fed will raise rates over the summer months.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding bullion.
The metal, which slid more than 6 percent in May, has risen about 2.8 percent so far this month on reduced expectations for an early rate hike.
The World Bank slashed its 2016 global growth forecast on Wednesday, which could also throw cold water on a possible Fed move.
Nervousness over Britain's referendum on its EU membership on June 23 could also bolster gold prices over the next few weeks, Macquarie's Turner said.
"Brexit is the next thing to look out for because if there was going to be a vote to leave, it would boost gold, if only because it pushes the Fed back again."
The world's biggest consumer of the yellow metal, China, kept its gold reserves unchanged, at 58.14 million ounces at the end of May, the central bank said on Tuesday.
Analysts, however, said China still has enormous U.S. dollar holdings and is likely to keep purchasing gold in order to diversify its forex reserves, which should serve as a supportive factor for the metal.