Gold started March on a positive note, with prices rising to a two-month high on Friday after muted economic data hardened expectations of a U.S. interest rate cut by June.
Spot gold rose 2.1% to $2,086.21 per ounce by 1:50 p.m. EST (1850 GMT), the highest since late December, and was on track for a second straight weekly rise.
U.S. gold futures settled about 2% higher at $2,095.7.
Benchmark U.S. 10-year Treasury yields and the dollar index retreated after the data, making gold more attractive.
Data showed U.S. manufacturing slumped further in February and the University of Michigan's surveys of consumers was also weak. Another set of data on Thursday indicated that the annual increase in U.S. inflation in January was the smallest in nearly three years, keeping a June rate cut from the Federal Reserve on the table.
Bart Melek, head of commodity strategies at TD Securities, said gold is seeing some upside as the market is convinced that the Fed will ease its monetary policy by midyear, lowering the opportunity cost of bullion.
"In three-four months, prices will hit a record if we see poor economic data and the market is convinced that (the) Fed is ready to cut," he said, adding that strong central bank buying is also supporting the market currently.
Lower interest rates tend to boost demand for non-yielding gold.
"There's been consistent buying today behind weaker-than-expected data and somewhat friendly Fed commentary. The NYCB news after the close yesterday helped to set the table," said Tai Wong, a New York-based independent metals analyst.
Investors also kept a tab on news that New York Community Bancorp found "material weaknesses" in internal controls related to its loan review, adding to commercial real estate exposure woes.
Spot silver rose 2.6% to $23.26.
Spot platinum rose 1.2% to $886.15, while palladium was up 1.4% at $955.50. Both eased on a weekly basis.
Northam Platinum's CEO said platinum mining companies in South Africa are caught up in the worst crisis in three decades as prices plummet.