Gold hit a one-month high on Friday and stayed on track for its biggest annual rise since 2010 as a wilting American dollar, political tensions and receding concerns over the impact of U.S. interest rate hikes fed its rally.
The greenback, in which gold is priced, is sliding towards its worst year since 2003, hurt by tensions over North Korea, the Russian scandal surrounding U.S. President Donald Trump's election campaign, and persistently low U.S. inflation.
The dollar's drop to three-month lows versus a basket of currencies on Friday lifted gold to its highest level since late November, within a few dollars of $1,300 U.S. an ounce.
Spot gold was up 0.2% at $1,296.69 U.S. an ounce, off a peak of $1,297.58. U.S. gold futures for February delivery were up 0.1% at $1,298.80 an ounce.
Experts say the shiny yellow metal will be vulnerable next year to a rebound in the currency, as well as any gains in yields. The opportunity cost of holding non-interest bearing bullion increases when yields rise elsewhere.
Among the precious metals, palladium has seen the strongest rise this year, climbing more than 57% as concerns grew over availability after years of market deficit.
Spot palladium was down 0.4% at $1,059.60 U.S. an ounce, having hit its highest since February 2001 at $1,072 in the previous session. It has held in a historically unusual premium to platinum through the fourth quarter.
Spot silver was up 0.2% at $16.87 U.S, while platinum was 0.4% higher at $926.75. This year the two metals have risen 5.9% and 3% respectively.
