Gold rose nearly 2 percent to above $1,550 an ounce amid thin volume on Friday, set for its biggest gain in five months, boosted by inflation worries, a dollar drop and expectations the US Federal Reserve will maintain easy money policy. Silver extended gains after it eclipsed the Hunt Brothers' peak set in 1980 on Thursday.
It was set for a 30 percent rise in April, its biggest monthly gain since April 1987. Platinum group metals also rose about 2 percent. Option traders reported strong buying of call options and call spreads, reflecting bullish market expectations. A gauge of bullion market volatility also spiked in response to a sharp price rally.
"Gold is showing a text-book bull market behaviour, a steady ascent without major spikes. It's the continuation of the same theme, as the Fed's posture seems to be fairly dovish still," said James Dailey, portfolio manager of the TEAM Asset Strategy Fund.Spot gold was last up 1.7 percent at $1,560.40 an ounce by 2:12 am EDT (1812 GMT), on course for a 9 percent monthly gain, its strongest since November. Bullion was also set for its seventh consecutive weekly rise, its longest winning streak since 2007.US June futures settled up 1.6 percent at $1,556.40 an ounce, with trading volumes restricted by a public holiday in London.
Meanwhile silver hovered close to its record high, having gained 4 percent this week, although analysts say its robust performance against the other precious metals may not be sustainable. Silver was last up 0.1 percent at $48.49 an ounce. The CME Group Inc, parent of the Chicago Board of Trade, said on Thursday it would raise maintenance margins for COMEX 5000 Silver futures by 13.2 percent, making it more expensive for silver speculators to trade in. For platinum group metals, platinum echoed the strength in gold and silver, rising 1.8 percent on the day to $1,869 an ounce, while palladium rose 2.4 percent to $790.