Gold hit its highest in 3-1/2 months on Friday as the dollar hit a one week low after the new US finance chief poured cold water on the "Trumpflation trade" that had boosted the greenback this year. Treasury Secretary Steven Mnuchin said on Thursday that any steps US President Donald Trump's administration takes on policy would probably have only limited impact this year, though he wants to see tax reform passed by August.
The comments suggested much work was still needed on the sweeping tax plan that Mnuchin called his main priority, and which investors had bet would stoke growth and inflation this year.
"We've got a vacuum of (US domestic) policy, real (interest) rates going down, the dollar going sideways and geopolitical (jitters) around the world ... all helping gold," ICBC Standard Bank analyst Tom Kendall said. "There is apparently a move of institutional investor money into gold and there are usually very good reasons for that." Spot gold had risen 0.29 percent to $1,253.53 per ounce by 1445 GMT, having touched its highest since November 11 at $1,260.10 earlier, zeroing in on the 200-day moving average.
US gold futures rose 0.24 percent to $1,254.40. Tempering gains in bullion, a poll on Friday suggested French presidential candidate Emmanuel Macron would beat far-right leader Marine Le Pen, who has promised a referendum on European Union membership.
Still, the precious metal was supported by tempered expectations of a US rate hike in March after minutes from the Federal Reserve's latest policy meeting struck a less hawkish note than expected. Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.
"Even in the event of a rate increase, we doubt the precious metal will lose much ground ahead of the key presidential elections in France in April, coupled with the Washington gridlock that seems to be calcifying," INTL FCStone analyst Edward Meir said. Holdings of the largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, have risen more than 5 percent this month on geopolitical risk.
Silver rose 0.53 percent to $18.26 per ounce, having touched its highest in 3-1/2-months at $18.40. Silver has gained about 1.5 percent this week in what could be its ninth straight weekly gain. Platinum rose 1.24 percent to $1,018.50 per ounce, having earlier hit its highest since early October at $1,028.60; while palladium gained 0.97 percent to $781.25.
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