London: Gold hit its highest in more than a year on Friday, extending the previous day's 2 percent rally as oil prices declined and the dollar softened, while traders awaited a closely watched payrolls report from the United States.
Weak numbers in the payrolls data, due at 1330 GMT, may further dampen expectations that the Federal Reserve will raise interest rates again this year, benefiting non-yielding gold.
Spot gold was up 0.7 percent at $1,271.88 an ounce at 1025 GMT, while US gold futures for April delivery were up $14.90 an ounce or 1.2 percent at $1,273.10. Earlier, spot gold hit $1,274.70, its strongest in 13 months.
The metal has risen 20 percent this year as volatility in equities and oil prices picked up, prompting investors to buy bullion as a haven from risk.
A 0.1 percent drop in the dollar versus the euro and softer oil prices on Friday are helping support gold.
"In the last 24 hours or so, gold has cleared the ($1,250 an ounce) hurdle and triggered additional buying," Simon Weeks, head of precious metals at ScotiaMocatta, said.
"People`s focus has come back towards gold as a safe haven for the first time in a couple of years, and hence the reasons we`ve had the moves that we have had."
Holdings of the world`s largest gold-backed exchange-traded fund, SPDR Gold Shares, rose nearly five tonnes on Thursday, data from the fund showed, bringing its inflow for the year to 151 tonnes, against 52 tonnes in the same period of 2015.
Investment interest has been driven by concerns over the global economy, which have dented expectations that the Fed will press ahead with fresh interest rate hikes. The Fed has indicated that further hikes will be data-driven.
US non-farm payrolls are estimated to have risen by 190,000 last month after increasing by 151,000 in January, according to a Reuters poll of economists. A positive number could weigh on gold, though analysts said it would have to be extremely strong to offset current strength in the metal.
"A disappointing number would likely be gold-bullish. But there is significant upward momentum in the market and we expect it would take a markedly positive jobs number to seriously dent the rally," HSBC said in a note.
Silver was up 1.2 percent at $15.42 an ounce, while platinum was up 1 percent at $958.50 an ounce and palladium was down 0.4 percent at $537.60 an ounce.