Gold pumped up to its highest in two weeks on Friday as currency-led buying triggered buy orders, which allowed the market to burst through well established ranges, dealers said, adding further gains were possible.
"I think the dollar gave the edge to the market, while the buy stops gave it a kick higher. $387.00 is the next level, it needs to go through there to be a convincing move up," Peter Hillyard, head of metal sales at ANZ Bank, said.
Spot gold jumped to $386.20/$386.80 a troy ounce by 1507 GMT, compared with $378.40/$379.00 in late New York trade on Thursday.
"I guess the market has been trying to make a move to the upside but it needed some sort of boost. If we close where we are now there's no reason why it couldn't get to $392.00," Hillyard added.
The dollar slid to two-week lows against the euro and the yen on Friday after a Federal Reserve official raised doubts a day earlier over how quickly the US central bank would raise interest rates.
A weaker US currency makes dollar-priced gold less expensive for non-US investors.
Major currencies were also holding gains against the dollar ahead of a meeting of G7 finance ministers, who are likely to comment on high oil prices.
High oil prices have been sending jitters through US stock markets as they would likely hurt corporate earnings, as well as consumer spending and sentiment.
A weaker stock market could drive more investors to gold, whose value often runs counter-cyclical to equity markets.
UBS Investment Bank analyst John Reade also noted strong open interest at the $380.00 strike price for the New York COMEX gold futures option expiry, due on May 25.
"Similar positioning in the large OTC expiry the following day (May 26) are likely to conspire to keep gold within a few dollars of that level until these events have passed," he added in a daily research note.
Silver stayed firm with gold after fund buyers had taken the market towards $6.00 earlier this week.
Spot silver stood at $5.89/$5.93, compared with $5.76/$5.80 in New York on Thursday.
Platinum flapped up to $816.00/820.00, compared with $803.00/808.00 previously, while palladium rose to $239.00/244.00 from $237.00/$242.00 in New York on Thursday.
Platinum group metals volumes were set to stay thin however as London's Platinum Week events drew to a close.
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