Spot gold hit its highest level since early July on Friday after weak factory growth in China fanned worries that the world's second largest economy may be slowing sharply, sparking safe-haven demand for the metal. Activity in China's factory sector shrank at its fastest pace in almost 6-1/2 years in August as domestic and export demand dwindled, a private survey showed.
US gold was bid up 0.7 percent to $1,161.10, having also hit its loftiest level in over six weeks. "A break out above the $1156-1157 level would signal a further extension of the (upwards) trend," said a trader in Singapore. The dollar fell to its lowest against a basket of currencies on Friday, making gold more affordable to holders of other currencies.
The dollar's fortunes have diminished after comments by Federal Reserve officials this week suggesting they could not yet pin down a September rate rise given lagging inflation and a weak global economy. Silver broke resistance around $15.60 to hit its most expensive since July 13, with selling being easily absorbed. Spot silver was last bid at $15.53, and little changed.