Gold hit a one-month high on Friday and ended the year with its biggest annual rise since 2010 as a wilting dollar, political tensions and receding concerns over the impact of U.S. interest rate hikes fed into its rally.
The dollar, in which gold is priced, is sliding towards its worst year since 2003, hurt by tensions over North Korea, the Russian scandal surrounding U.S. President Donald Trump's election campaign, and persistently low U.S. inflation.
The dollar's drop to three-month lows versus a basket of currencies on Friday lifted gold to its highest level since late November, within a few dollars of $1,300 an ounce.
Spot gold was up 0.62 percent at $1,302.72 an ounce.
U.S. gold futures for February delivery settled up 0.93 percent at $1,309.30 today, hitting a high of $1,309.80, its highest level since Sep 26th when gold hit a high of $1,317.10.
"In the last couple of weeks trade has been relatively thin, yields have been under pressure and the dollar as well, so gold has profited from that," ABN Amro analyst Georgette Boele said.
"If you look over the year, dollar weakness has been the main theme."
Gold will be vulnerable next year to a rebound in the currency, as well as any gains in yields, she said. The opportunity cost of holding non-interest bearing bullion increases when yields rise elsewhere.
The impact of three U.S. interest rate hikes this year was offset by the dollar's weakness, she said. "The dollar is the most important driver, and then real yields," she said. "The Fed is increasing rates, but the dollar's not profiting."
Gold, which turned in its best month since August, has also benefited of late from technically driven momentum, analysts said.
After breaking above its 100-day moving average this week at $1,295 an ounce, new resistance comes in at the $1,300 level, ScotiaMocatta's technical team said in a note.
"Momentum indicators are bullish as gold appears poised to target the October high (of) 1,306," it said.
Among the precious metals, palladium has seen the strongest rise this year, climbing more than 55 percent as concerns grew over availability after years of market deficit.
was down 0.24 percent at $1,062.75 an ounce, having hit its highest since February 2001 at $1,072 in the previous session. It has held in a historically unusual premium to platinum through the fourth quarter.
Spot silver was up 0.48 percent at $16.92, while was 0.13 percent higher at $924.24. This year the two metals have risen 5.9 percent and 3 percent respectively.