Spot gold climbed 2.3% to $4,619.57 per ounce. U.S. gold futures rose 2.4% to $4,680.60.
Prices have gained about 5% so far this week, including the biggest one-day rise since early February on Wednesday.
The metal is also trading above all key moving averages, having broken above the closely watched 200-day moving average of around $4,513, a move technical analysts typically view as bullish.
“A big factor, of course, is technical... next step is $4,700 if this momentum continues, but also I think it’s been very much driven by a drop in the U.S. dollar,” said Bart Melek, global head of commodity strategy at TD Securities.
The dollar languished near its lowest level since mid-May as investors questioned whether the U.S. Treasury’s efforts to calm the bond markets might end up undermining confidence in the currency.
U.S. Treasury Secretary Scott Bessent on Thursday said the government could expand Treasury buybacks further, a day after the department unveiled plans to double buybacks of longer-dated securities.
“Gold call option demand has risen sharply amid renewed demand for global macro-policy hedges, creating a mechanical price amplifier to both the upside and downside,” Goldman Sachs said in a note.
Goldman noted that weaker market conviction around U.S. rate hikes following the Fed’s July pause and softer economic data has helped revive speculative interest in COMEX gold and demand for rate-sensitive gold ETFs, with rising and elevated call option demand likely amplifying the move.
On physical demand, the recent rally in prices deterred retail buyers in India, while demand in top consumer China held steady.
Poland’s central bank slowed gold buying to 7.8 metric tons in July, data showed on Friday.