Gold prices hit a record high on Thursday as the softer dollar and uncertainty about economic and financial stability persuaded investors to seek a safe place to park their assets.
Strong investment demand also pushed spot silver to $20.75 an ounce, its highest since March 2008.
Spot gold was bid at $1,276.85 a troy ounce at 1119 GMT (7:19 a.m. EDT) compared with $1,265.65 an ounce at the close on Wednesday.
Earlier on Thursday it hit a record $1,277.05 an ounce and many expect it will hit $1,300 very soon.
One potential trigger could be the conclusion of a meeting of the U.S. Federal Reserve on September 21, when the central bank could announce further quantitative easing to stave off economic slowdown in the world's largest economy.
"If the Fed says next week it is going to do more quantitative easing...the inflation bugs will have a field day," said David Thurtell, analyst at Citi, who thinks gold could see the $1,300 level next week.
Quantitative easing is normally a process by which central banks attempt to pump money into the economy by buying bonds. Excess liquidity could lead to too much money chasing too few goods or services -- resulting in price pressures.
Also on the agenda is the U.S. fiscal outlook with the start of the new financial year in the United States.
"People will worry as politicians commit to new spending, especially with mid-term elections approaching," Thurtell said.
Gold market sentiment was helped by the euro, which rose broadly on Thursday, hitting one-month highs versus the dollar and the yen, after a Spanish bond auction produced lower average yields than previously.
"There's still no real confidence in the U.S. recovery. No one sees any real reason for gold prices to decrease," said Gwenael Chazal, head of Metal Trading.
Before the Fed's meeting next week triggers for upward momentum could include the U.S. producer prices for August -- due on Thursday at 1230 GMT.
U.S. consumer prices for August due on Friday could also spark a rally, which could take gold to $1,300 an ounce.
"There is no guarantee that it will happen with macro data more or less in line with consensus lately and some positive surprises ... It was investment demand that pushed gold up and investment demand will push it to $1,300."
Investor interest can be seen in the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust (GLD.P), which said its holdings fell to 1,294.746 tonnes by September 15 from 1,298.698 tonnes on September 14.
But the fall follows a six-tonne rise the previous day.
Positive macro data is also partly behind the run higher in industrial precious metals such as silver, platinum and palladium. Spot silver was bid at $20.74 an ounce from $20.49 late on Wednesday.
"Hopes for strong economic recovery are why silver is experiencing a similar rush to that seen in platinum and palladium earlier this year," Kryuchenkov said.
Spot platinum was bid at $1,608.00 an ounce from $1,604.50 at the close on Wednesday when it touched a four-month high of $1,619.50. Palladium was at $554.50 at $553.78.