Gold hit a 2010 high above $1,170 (U.S.) an ounce in Europe on Friday, fuelled by euro strength and investors continuing to embrace the metal's safe-haven properties on unease over euro zone sovereign debt levels.
Spot gold reached a peak of $1,176.40 an ounce and was bid at $1.174.55 an ounce at 0913 GMT, against $1,166.10 late in New York on Thursday. It also hit a record peak in Swiss francs at 1,281.19 francs an ounce.
The precious metal has rallied 5.3 per cent so far in April, its biggest one-month rise since November 2009, as credit ratings downgrades of Greece, Spain and Portugal unleashed a wave of risk aversion, channelling money into gold.
Financial markets were settling down slightly, helping the euro to rally, on hopes that a multi-billion-euro aid package for Greece would be hammered out within days and prevent the crisis from spilling over to other countries.
But the fear of contagion was clearly evident in gold, analysts said, with prices now on track to move back towards their December high, a record peak of $1,226.10 an ounce.
"Gold has been trading in a range of $1,160-1,175, and if $1,175 gets taken out, we should be in for a sharp rally," said Afshin Nabavi, head of trading at MKS Finance in Geneva. "We could head for the $1,200 area."
"Precious metals have put in a very good performance this week," he added. "Once the metals show confidence and direction, we see investors coming back in, given the situation in Europe."
U.S. gold futures for June delivery on the COMEX division of the New York Mercantile Exchange rose $7.30 to $1,176.10 an ounce.
The euro held on to gains on Friday as hopes of a quick Greek rescue package spurred investors to cover short positions. It is on track to lose 2 per cent this month, although it is above this week's one-year low of $1.3114.
Improving risk appetite lifted stock markets as buyers hunted bargains, with European shares higher in early trade. Oil and copper rose 1.1 per cent, while wheat and corn prices edged higher.
"This morning we're seeing commodities improve, the euro trade higher, and risk appetite seems to have picked up," said TheBullionDesk analyst James Moore.
The world's largest gold exchange-traded fund, the SPDR Gold Trust, said its holdings hit a record 1,159.002 tonnes as of April 29, up 6.089 tonnes from the previous day.
"This week we've seen a strong pick-up in safe-haven demand (for gold) and big increases in the U.S. SPDR exchange-traded fund," said James Moore, an analyst at TheBullionDesk.com.
"That is a strong signal that some U.S. investors are very concerned about the possible implications of the European debt situation."
Other precious metals, which are more industrial in use than gold, also recovered some of this week's losses on Friday, tracking gains in other commodities with industrial exposure.
Silver was at $18.58 an ounce against $18.43, platinum was at $1,735 an ounce versus $1,729 and palladium was at $549.50 against $549.50.