Gold climbed on Friday and was heading for its fifth weekly gain, supported by a weaker dollar and prospects for further monetary policy easing in the wake of Britain's vote to leave the European Union. Spot gold rose to a session high of $1,341.40 an ounce, and was 1.2 percent higher at $1,336.01 by 1415 GMT. The metal gained 8.8 percent in June, its biggest monthly rise since February.
Gold's strength benefited silver, which breached the $19 an ounce level on Friday for the first time since September 2014. It rose as much as 3.8 percent to $19.40 and traded 3.3 percent higher at $19.28. Silver was on track for its best week since August 2013 having gained more than 8 percent so far.
"For gold, the initial reaction was safe-haven demand due to the uncertain political situation in Europe, but then the latest move might be more of a reaction to comments from central banks that they are moving to an easing bias," Danske Bank senior analyst Jens Pedersen said.
The dollar fell 0.4 percent against a basket of six currencies, while European stocks recovered on signs that central banks such as the Bank of England, the Bank of Japan and the European Central Bank will loosen monetary conditions even further. Concerns about the global economy have made a US rate rise in coming months less likely, analysts say, but much will depend on US economic data and markets will be watching non-farm payrolls due on July 8 in particular for clues.
"Gold is rallying as expectations are once again rising for another central bank easing cycle. Could next week's non-farm payrolls stop this? The last two were very weak, but we think misleading and some other US data has been improving," Macquarie analyst Matthew Turner said.
"But the Fed's reaction function appears to have changed, and we doubt they have much appetite to raise rates until December," Turner said. Low US interest rates are positive for gold because the opportunity cost of holding it decreases and the dollar typically falls, making the metal cheaper. Societe Generale raised its gold price forecasts on Thursday on concerns about the ongoing political, financial and economic fallout of Britain's vote last week to leave the European Union. Platinum marked its highest level since May 18 at $1,050.80 an ounce and was on track for its best weekly rise since the end of April. Palladium, heading for its best week since early March, rose to its highest since May 13 at $601, and was up 0.6 percent at $596.20.