Gold rose more than 1% on Friday and was within a striking distance of the six-year high reached in September, as investors flocked to the safe-haven metal after a senior Iranian military official was killed in an air strike authorised by the United States.
Tensions flared in the Middle East after Iranian Major-General Qassem Soleimani, head of the elite Quds Force, and top Iraqi militia commander Abu Mahdi al-Muhandis were killed in the air strike on their convoy at Baghdad airport.
Spot gold was up 1.2% at $1,547.19 per ounce as of 1012 GMT, having touched it highest since early September, when bullion scaled a multi-year peak of $1,557.
U.S. gold futures rose 1.4% to $1,549.70.
"We are seeing gold and silver continue to build on the gains we saw towards the end of December and there is no doubt
that the latest developments with the attack in Iraq has taken us up to this level," Saxo Bank analyst Ole Hansen said.
Iraq's prime minister condemned the air strike and said it would "light the fuse of a destructive war in Iraq".
Gold, considered to be a safe investment in times of political and economic uncertainties, has gained over 2% so far this week.
Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, on Thursday rose 0.2% to their highest since Nov. 29.
"From a technical perspective, key level of support is just around $1,520 and as long as we stay above that level we are going to see further gains come into the market," Hansen said, adding the sell-off in equity markets was lending further support to gold.
Other safe-havens also rallied with yen hitting a two-month high against the dollar. U.S. 10-year Treasury yields fell to their lowest in three weeks.
Investors now await the minutes of the Federal Reserve's Dec. 10-11 policy meeting due at 1900 GMT.
"All the while, the yellow metal remains very well supported by the strong seasonal performance for gold in January. The recent high of $1,557 is the critical resistance to watch," Stephen Innes, a market strategist at AxiTrader said in a note.
Mirroring gains in gold, silver hit a more than two-month high of $18.26 and was last up 0.7% to $18.15 per ounce.
Platinum rose 1.3% to $990.80, heading for about 5% weekly gain. Palladium slipped 0.1% to $1,957.49, but was on track for a 3% weekly gain.