Gold climbed 1% to a near three-week peak on December 22 as the dollar and US Treasury yields slipped on rising expectations that the Federal Reserve will cut interest rates early next year.
Spot gold was up 1.2% to $2,069.34 per ounce as of 9:43 a.m. ET (1443 GMT), its highest since Dec. 4, putting it on course for a 1.8% weekly gain.
US gold futures rose 1.48% to $2,081.60.
"Precious metals, including gold, are being driven higher by very aggressive rate cut expectations with the market pricing in a Fed cut in March and a total of 150 bps in 2024," said Tai Wong, a New York-based independent metals trader.
"It's priced for perfection but the market usually discounts too zealously."
Traders on December 22 stuck to the view that the US central bank will start cutting rates in March after government data showed price pressures continued to cool last month.
Annual US inflation slowed further below 3% in November and underlying price pressures continued to abate.
The dollar index traded near a five-month low, making gold more appealing to foreign buyers. The benchmark 10-year bond yields were close to their weakest level since July.
Gold will continue to be helped by weaker Treasury yields and the US dollar index and concerns about a slowdown in the economy, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
"The current technical breakout could really push prices up to that $2,100 level. It could retest those recent contract highs."
On the physical front, gold demand in India fell sharply due to high domestic prices.
In other metals, silver gained 0.8% to $24.59 per ounce. Platinum rose 1.8% to $980.55 and palladium rose 2.5% to $1,244.18. All three metals were on track for their second consecutive week of gains.
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