Gold prices rose just over 2 percent on Thursday afternoon, reversing earlier losses and lifting silver, as U.S. equities resumed their downward spiral, renewing bullion's safe-haven appeal that has spurred the market's biggest rally in years.
On Wall Street, equities snapped a three-day rally, after a slump in shares of Wal-Mart Stores weighed on retail stocks and oil prices retreated.
"The equities pulled back. Gold popped," said Bob Haberkorn, senior market strategist at RJO Futures in Chicago.
"While equities are starting to come back and oil's shown a little bit of life, gold is strengthening as the day goes on. The sentiment in gold right now is overwhelmingly bullish."
Spot gold was up 2.2 percent at $1,235.30 an ounce after steadily rising $35 off the intraday lows. The recovery put it closer to the one-year highs around $1,260 hit a week ago.
U.S. gold futures for April delivery settled up 2 percent at $1,236.30.
Silver futures recovered earlier losses and were up 0.86 percent at $15.51.
"That turning point midday, you had stocks sell off a little bit. Now gold has turned up pretty meaningfully," said Rob Haworth, senior investment strategist for U.S. Bank Wealth management in Seattle.
"Gold's working as a safe haven trade right now in this era of negative interest rates in Europe, Japan, Sweden and Denmark."
A gauge of stocks around the globe edged higher, extending its best run of the year, as hopes for a stabilization in oil prices lifted emerging markets, while earnings in Europe and the United States limited gains.
Financial market volatility has increased expectations that the U.S. Federal Reserve may hold off hiking interest rates further this year.
Some traders attributed the buying to high-speed computer-driven algorithmic trading.
"The sellers seem to have disappeared," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York, adding that a settlement above $1,230 "will get the bulls aroused again."
Gold has risen almost 20 percent since hitting near six-year lows in December for its steepest gains in years.
Inflows into gold-backed exchange-traded funds (ETFs), holdings of which have already risen this year by more than they fell in the whole of 2015, showed investor appetite has sharpened, analysts said.
Platinum was up 0.2 percent to $947.90 per ounce and palladium was down 1.5 percent to $503.51.