Spot gold traded up to $834 an ounce, its highest since Nov. 26, and was quoted at $833.70/834.40 per ounce at 1340 GMT, against $824.70/825.50 late in New York on Thursday.
"With the dollar under pressure and violent protests seen in Pakistan, it is likely that gold could see further safe-haven investment demand, and potentially rise to challenge this year's high," said James Moore, metals analyst at TheBullionDesk.com.
Gold, traditionally seen as a safe-haven asset, jumped on Thursday after Pakistani opposition leader Benazir Bhutto was killed.
The metal rose to a 28-year high above $845 in November -- just shy of its historic high of $850 on a tumbling dollar and firm oil prices. Gold has gained 31 percent so far this year.
The dollar was on track for its worst weekly performance in over a year, hit by soft U.S. data and a rise in risk aversion following the assassination of Benazir Bhutto.
A weaker dollar makes gold cheaper for holders of other currencies and often lifts bullion demand. The metal is also generally seen as a hedge against oil-led inflation.
U.S. crude edged higher towards $97 a barrel, within sight of its record high.
A precious metals trader in London said gold was getting support from the events in Pakistan.
"I think it is in people's mind," he said, adding the metal was also expected to get a boost from investment funds, which were likely to allocate new money in 2008.
"Gold has started to spike up and most factors are turning in favour of gold. If the momentum sustains, gold may reach new highs early next year and crude oil prices may add fuel to the rally," said Pradeep Unni, analyst at Vision Commodities.
The market also awaited the release of U.S. new homes sales at 1500 GMT and the Chicago purchasing management index at 1445 GMT for any impact on the dollar, that might influence gold.
In other bullion markets, U.S. gold futures edged higher, with the February contract up $4.90 at $836.60 from the New York settlement. The benchmark December 2008 contract in Tokyo closed at 3,060 yen a gram, up 8 yen.
Platinum fell to $1,532/1,536 an ounce from $1,535/1,539 on Thursday, when it hit a record high at $1,542.
The metal has gained sharply this year on positive fundamentals, with concerns over physical supplies. Supply disruptions at some mines in South Africa, the world's top producer, have resulted in a shortage this year and are likely to leave the market in deficit again next year.
Palladium was up $1 at $363/367 an ounce, while silver rose to $14.73/14.78 an ounce from $14.58/14.63.