Spot gold was up 0.5 percent at $1,253.31 per ounce, as of 1358 GMT, putting it up 1.9 percent for the week. U.S. gold futures slipped 0.1 percent to $1,251.60 an ounce.

"We have political turmoil in the US which has driven the dollar lower... this week's sentiment has supported gold," Danske Bank analysts Jens Pedersen said, adding that it was unclear whether bullion would hold on to the gains into next week.

Gold is often seen as an alternative investment during times of geopolitical and financial uncertainty, gaining alongside bond yields and the yen while stocks usually take a hit.

U.S. President Donald Trump last week fired FBI Director James Comey, triggering a political firestorm which culminated on Wednesday in the Justice Department's appointment of a special counsel to probe possible ties between Russia and Trump's 2016 presidential campaign.

"Political risk is back on again after market participants became overly complacent following the outcome of the French elections," Commerzbank analyst Carsten Fritsch said.

"Risk sentiment took a major hit," he said.

The dollar index, which measures the greenback against a basket of six major currencies, was headed for its worst week in nine months while world stocks were set for the first weekly fall in five.

New applications for U.S. jobless benefits unexpectedly fell last week and the number of Americans on unemployment rolls tumbled to a 28-1/2-year low, pointing to rapidly shrinking labour market slack.

"Safe-haven buying has provided strong support to gold prices over the past six months," ANZ said in a note.

"However, rising geopolitical risks in the U.S. and elsewhere are likely to propel prices even higher, despite the spectre of a rate hike in the U.S. next month."

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.14 percent to 850.71 tonnes on Thursday.

Among other precious metals, palladium gained 0.3 pct to $765.85 per ounce. The metal slipped 5 percent this week and was poised for its biggest weekly fall since late January.

Platinum rose 0.6 pct to $937.13 an ounce while silver climbed 1.5 pct to $16.78 an ounce. Both metals were headed for their strongest week since mid-April.