Gold hit record highs on Friday and silver its strongest since early 1980 as the dollar slid on the prospect of a U.S. government shutdown, with euro zone debt concerns and unrest in North Africa further supporting buying.
Spot gold rose as high as $1,472.96 an ounce and was bid at $1,469.40 an ounce at 1335 GMT, against $1,457.45 late in New York on Thursday.
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Silver was bid at $40.20 an ounce against $39.51, having earlier risen as high as $40.28.Friday's slide in the dollar added fuel to a rally that has already taken gold to a series of record highs this year.
"The U.S. budget at an impasse and the ECB rate hike have meant the dollar dropping to the lowest level since Dec. 2009 on the index," said Saxo Bank senior manager Ole Hansen.
"This is undoubtedly a very important ingredient for the rally we have seen."
"New highs should now mean that the market will be looking to establish a new trading range above $1,450 which possibly could take us towards the $1,500 level," he added.
The euro was buoyed by expectations for further euro zone rate rises, while the dollar came under pressure from a looming budget deadlock in the United States.
The White House and Congress are working furiously to break a U.S. budget deadlock and avoid a federal government shutdown, after President Barack Obama and congressional leaders failed to reach a deal in late-night talks.
Meanwhile, oil climbed to its highest level in 2-1/2 years as supply cuts stemming from attacks on Libyan oilfields offset demand concerns spurred by a major aftershock in Japan.
Gold has hit a series of peaks since January as violence across the Middle East and North Africa sparked safe-haven buying and pushed oil prices to multi-year highs.
Expectations euro zone interest rates would rise curbed gains, but gold broke higher after European Central Bank chief Jean-Claude Trichet suggested an ECB rate hike announced on Thursday would not necessarily be the first of a series.
ETFs SEE INFLOWS
Concerns over euro zone debt are also supporting precious metals. Euro zone finance ministers will discuss Portugal's bailout plea on Friday, including how much it needs and what reforms it could do in return.
"Inflationary concerns and sovereign debt worries in Europe (are) heightening demand for value store and safe haven investments," Fairfax analyst John Meyer said in a note.
Meanwhile, interest in gold-backed exchange-traded funds picked up, with holdings of the largest, New York's SPDR Gold Trust, increasing by just over 11 tonnes on Thursday, their biggest one-day rise since Jan. 21.
Holdings of the COMEX Gold Trust rose by 260,000 ounces on Thursday, while those of the Sprott Physical Gold Trust increased by 6.29 percent to 1,024,322.0 ounces between Wednesday and Thursday.
Meanwhile, holdings of the largest silver ETF, the iShares Silver Trust, rose to a fresh record at 11,192.8 tonnes on Thursday.
Silver is becoming increasingly expensive compared to gold as prices of both assets rise. The gold:silver ratio -- the number of silver ounces needed to buy an ounce of gold -- fell to a 28-year low near 36 on Friday.
Among other precious metals, platinum was at $1,802.74 an ounce against $1,781.10, while palladium was at $793.58 against $775.03.