Gold prices rose nearly 1% on Thursday, supported by a weaker dollar and some safe-haven demand as weak U.S. economic readings and hawkish comments from Federal Reserve officials fueled recession worries.
Spot gold was last up 1.5% to $1,932.40 per ounce. U.S. gold futures rose 1.41% to $1,933.90..
"There is flight to safety. Gold just seems to do better when markets are declining," said Jeffrey Sica, chief executive officer of Circle Squared Alternative Investments
"The U.S. dollar is weakening and that's one of the reasons why we're seeing the rally in gold, which I think it is going to just accelerate from here."
The dollar was hovering close to an eight-month low after a raft of data showed the U.S. economy was losing momentum, making gold cheaper for holders of foreign currency.
Data on Wednesday showed U.S. retail sales fell by the most in a year in December, while producer prices fell more than expected last month, offering evidence that inflation was receding.
Sentiment in wider financial markets remained weak as global slowdown worries dented investors' appetite for riskier assets.
Meanwhile, Boston Fed President Susan Collins said the Fed would need to raise interest rates to "just above" 5% and hold them there, the latest central banker to suggest a higher policy rate to combat inflation.
However, traders see rates peaking at 4.89% by June, with a 25-basis point rate hike baked in for February.
Interest rate hikes, intended to curb inflationary pressure, also reduce the appeal of non-yielding gold.
Given the mixed messaging coming from Fed officials, gold has struggled to gain a firm footing above $1,920 and is looking distinctly overbought on the charts, independent analyst Ross Norman said.
Elsewhere, spot silver rose 1.72% to $23.8292 per ounce, platinum fell 0.45% to $1,033.3007 and palladium jumped 2.18% to $1,775.8759.