Gold climbed to a 28-year peak on Friday and platinum traded just below an all-time high, as a record low dollar and lifetime-high oil spurred buying.
Gold, often seen as a hedge against oil-led inflation and traditionally deemed a safe-haven asset, was gradually advancing towards the next big target of $800 an ounce while the dollar struggled to find a solid base.
A series of disappointing U.S. economic data has fuelled near-universal expectation that the U.S. Federal Reserve will cut interest rates by at least 25 basis points at its meeting next week -- a negative factor for the dollar and good for gold.
The deteriorating economic picture is manifesting itself in a weaker dollar and that's helping gold. Oil is also looking strong. We are getting close enough to $800, said John Reade, head of metals strategy at UBS Investment Bank.
The danger of a correction is still there but you are going to need a trigger for it, he said.
Spot gold hit a high of $778.25 an ounce, the highest since January 1980 when it rose to an all-time high of $850. It was quoted at $775.15/775.75 by 5:56 a.m. EDT, against $767.90/768.70 late in New York on Thursday.
The metal has surged 23 percent this year.
The dollar fell to fresh record lows against the euro and a basket of currencies, while oil shot up to record highs on heightened tension between the United States and Iran and on worries over energy supply shortages.
A weaker dollar makes gold cheaper for other currency holders and lifts demand. The metal also attracts investors from the currency market in the event of a cut in interest rates.
Rising crude oil prices on fears of interruptions of supply from the Middle East are another supportive factor for gold, Dresdner Kleinwort said in a daily report, adding the political tension in the Middle East might lead to higher oil prices and further increase gold's appeal as a safe haven.
The United States slapped new sanctions on Iran and accused its Revolutionary Guard of spreading weapons of mass destruction. Also, President Abdullah Gul warned Kurdish rebels on Thursday that Turkey's patience was running out after Turkish forces said they had repelled a guerrilla attack.
Money also continued to flow into exchange-traded gold funds. The latest data showed that volume in StreetTRACKS gold ETF rose 20 tonnes in the past month to a record high of 597.53 tonnes.
In other bullion markets, the benchmark August 2008 gold futures contract in Tokyo rose 56 yen a gram, or 2 percent, to 2,879 yen, while the most-active December U.S. gold futures rose $8.6 an ounce to $779.6 in electronic trade.
Platinum tracked gold, with supply worries supporting the metal, used to clean vehicle exhaust fumes and make jewellery.
A mine shaft remained shut at South Africa's Impala Platinum (IMPJ.J: Quote, Profile, Research), the world's second biggest producer of platinum, after a fatal accident earlier in the week.
Silver climbed to an eight month high of $14.13 an ounce before easing to $14.08/14.12, against $13.86/13.91 in the U.S. market. Palladium rose to $372/377 from $362/366.
(Additional reporting by Risa Maeda in Tokyo)