Gold prices hit record highs for a fifth session on Thursday and silver rallied to its strongest since 1980 as the dollar slid to a three-year low against a basket of major currencies.
The action in the currency markets added fuel to a rally sparked by concerns over the U.S. economic outlook, rising inflation, worries over euro zone debt and historically low interest rates in the United States, analysts said.
Spot gold was bid at $1,502.10 an ounce at 1322 GMT, against $1,498.15 late in New York on Wednesday, having earlier peaked at $1,508.75 an ounce. U.S. gold futures for June delivery rose $3.90 an ounce to $1,502.80.
Silver was bid at $45.71 an ounce against $45.20.
"We've seen the U.S. dollar weaken pretty much across the board this morning, even against the yen," said Credit Suisse analyst Tom Kendall.
"The carry trade is back in force and so we are looking at the .DXY breaking down through 74, making new lows for the year, and that is certainly playing into precious metals."
Gold prices have risen 5.4 percent so far this month and are on track for a sixth straight week of gains, reflecting strength across the commodity markets.
The Reuters-Jeffries CRB index, a global benchmark for commodities, posted its biggest one-day rise in a fortnight on Wednesday.
Many have been helped by losses in the dollar, which slid to its lowest since early 2008 against a basket of major currencies on Thursday.
Brent crude rose above $124 a barrel as U.S. crude stocks fell unexpectedly last week and the dollar weakened, though it later pared gains.
Investors have rushed into risky assets due to strong U.S. corporate earnings and signs the global economy is chugging along even as the Federal Reserve stays very cautious about when it will start to unwind its super-loose policy.
TIGHTER POLICY EYED
A tightening of U.S. monetary policy and eventual rise in interest rates are still viewed as the biggest risk factors for gold, which as a non-interest bearing asset has a lower opportunity cost when rates are depressed.
But for the moment the precious metal is proving resilient above $1,500 an ounce.
"We still expect dips to be viewed as buying opportunities, with gold and silver viewed favourably by investors seeking to hedge against inflation and debt jitters," said FastMarkets analyst James Moore.
On the supply side of the market, African Barrick Gold said its output fell 2 percent year-on-year in the first quarter, but said it was on track to meet its full-year production target.
Gold is much less a hostage to traditional supply and demand fundamentals than commodities that are physically consumed like oil, but these factors can still have an impact on price.
"An ongoing supply/demand imbalance underpins the market as good demand for gold jewellery and investment bars and coins in Asia outweighs mine supply," said Fairfax analyst John Meyer.
Among other precious metals, platinum was at $1,811.99 an ounce against $1,791.15, while palladium was at $763 against $767.97.
Anglo Platinum, the world's number one producer of the precious metal, kept its full-year production target on Thursday despite a 5 percent fall in first-quarter output attributed to safety stoppages.