Gold hit a 16-month high above $700 per ounce on Friday, boosted by a falling dollar after U.S. data showing a surprise contraction in U.S. non-farm payrolls for the first time in four years.
The August report showing a fall of 4,000 jobs dented the U.S. currency against the euro, making dollar-denominated gold cheaper for overseas investors.
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The data looked certain to increase pressure on the Federal Reserve to cut U.S. interest rates.
Bullion had earlier tested resistance at $700 with fund buyers encouraged by strong oil prices, healthy physical demand and safe-haven buying against a backdrop of worries over problems on credit markets.
Gold traded as high $704.60 an ounce by 1301 GMT, closing in on a 26-year high of $730 hit in 2006 and up 1 percent from New York's late quote of $695.70/696.30 on Thursday.
"The latest rise is entirely related to the surprise drop in U.S. jobs data. I think the fixed income market has dramatically increased the chances of a 50-basis-point interest rate cut," said James Steel, HSBC metals analyst in New York.
"Consequently, liquidity is surging through the gold market -- there's all round buying," he added.
A cut in U.S. interest rates would put pressure on the dollar, making dollar-priced gold cheaper for other currency holders.
Simon Weeks, head of precious metal trading at Bank Nova Scotia, said gold was also starting to break out technically in other currencies.
Gold priced in euros rose to its highest since early March, which analysts consider to be a bullish sign.
Bullion is also generally seen as a hedge against oil-led inflation and benefited on Friday from crude prices rising towards a record peak.
Oil held above $76, within $3 of its all-time high, as tension in the Middle East compounded supply worries after further declines in U.S. fuel inventories.
Data also showed that gold held in New York-listed StreetTRACKS Gold Shares, the world's largest gold-backed ETF, reached record high of 542.35 tonnes, up 26.91 tonnes or 5 percent from the start of the month.
In other metals, platinum rose to a one-month high of $1,294.50 an ounce and was last quoted at $1,289.00/1,296.00, against $1,284.50/1,291.50 in New York.
Palladium was broadly steady at $333.65/337.65 an ounce, while silver rose to $12.64/12.67 an ounce.