Gold hit a three-week high on Friday and was on track for a second straight weekly gain as the dollar tumbled to a 13-month low.
A near 2 percent rise in the euro this week pinned the dollar to multi-month lows against a trade-weighted basket of its rivals.
The euro rose to its highest since August 2015 in early European trade on Friday as the single currency`s bounce prompted some investors to cover short positions.
It climbed 0.3 percent to $1.16650 as markets bet the European Central Bank would tweak its policy stimulus in the autumn.
"The dollar weakness should continue to support gold around current levels and we look to a break through the 100- and 50-day moving averages as a pivot point for further gains," MKS PAMP trader Sam Laughlin said in a note.
A weaker dollar makes U.S. dollar-denominated gold more attractive for buyers using other currencies.
Spot gold was up 0.2 percent at $1,247.17 per ounce as of 0732 GMT, after hitting its highest since June 29 at $1,248.30. It has gained about 1.5 percent so far this week.
U.S. gold futures for August delivery rose 0.1 percent to $1,246.50 per ounce.
"What we`re seeing right now is the overhang from political risks in the United States," said Stephen Innes, head of trading for Asia Pacific at OANDA in Singapore.
The Republican Party`s repeated failures to overhaul the healthcare system and multiple congressional and federal investigations into President Donald Trump`s campaign ties to Russia have cast a shadow over his first six months in office.
Spot gold may test a resistance at $1,250 per ounce, a break above which could lead to a further gain to $1,261, according to Reuters technical analyst Wang Tao.
"If the downside is limited at $1,200, any large disappointment in the (economic) growth story will lead to an increase in gold prices" said Dominic Schnider at UBS Wealth Management in Hong Kong.
"The appeal of gold as an insurance asset is greater today than it was at the beginning of the year."
Gold is often perceived as an insurance against economic and financial concerns.
Among other precious metals, silver rose 0.6 percent to $16.38 per ounce after touching $16.42 in the previous session, the highest since July 3.
"The grey metal is encountering some resistance toward $16.40, once again testing the figure during Asian trade on Friday, however unable to break through," said MKS PAMP trader Laughlin.
Platinum fell 0.4 percent to $923.00 per ounce, but was set for a weekly gain.
Palladium rose 0.7 percent to $848.75 per ounce, but was down over 1 percent for the week.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)