Gold rose for a second day on Thursday, hitting three-month highs as the dollar continued to ease amid mounting doubts that the U.S. Federal Reserve will raise interest rates this year due to global economic and financial headwinds.
Analysts have said dovish comments from New York Fed President William Dudley on Wednesday and recent weak U.S. economic data have cast more doubt on the likelihood of a swift pace of Fed rate increases this year.
"The market is fetishizing bad news and convincing itself that the Fed will never be able to hike again," director of base and precious metals trading for BMO Capital Markets in New York.
Higher U.S. interest rates make non-yielding gold a less attractive asset.
was up more than 1 percent at $1,155.71, after touching $1,156.60 earlier in the session, its highest since Oct. 29. That built on Wednesday's 1.2 percent rise.
U.S. gold for April delivery delivery settled up 1.4 percent at $1,157.5 an ounce.
Matt Turner, analyst at Macquarie, said that while a weaker dollar and changing expectations about Fed policy were driving gold higher on Thursday, things could change on Friday depending on a key U.S. jobs report.
"The simplest scenario is that if the data is strong, people will start thinking maybe the Fed can raise rates at some point and gold will go down, and if it's weak people will think it's not going to happen," he said.
"But it's not that simple. To some extent gold has some momentum here so it's a bit difficult to say ... but we've also seen quite an extreme move in the past few days and often those sort of moves see a pullback."
Seen as a safe haven during times of economic and financial turbulence, gold has now risen 9 percent this year as volatility in financial markets pushed investors into low risk assets.
Even if it were to pull back on Friday on the jobs report, analysts say it is unlikely to fall far after decent buying in exchange-traded funds in recent weeks.
Spot silver was down 0.2 percent to $14.85 an ounce. Spot was also down 0.2 percent to $906.00, while rose 0.4 to $513.50.