Gold advanced to a record high close to $5,600 an ounce Thursday, as investors sought refuge from escalating geopolitical tensions and weakening economic signals in the United States.

Silver also benefited from the flight to safety, breaking above the $120 level.

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Spot gold was 2.1% higher at $5,513.09 an ounce by 1122 GMT, after earlier touching $5,594.82. The metal, which has hit new highs in nine straight sessions, was up 28% for the month so far.

U.S. gold futures for February delivery were up 3.8% at $5,506.30 after hitting an all-time high of $5,626.80.

"Gold's perfect storm continues with U.S.-Iran geopolitical tensions, a weak dollar and market expectations of more Fed rate cuts driving prices to endless record highs," said Jamie Dutta, market analyst at Nemo.money, adding that strong ETF inflows have also contributed to the rally.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings on Wednesday rose to 35,043,181 ounces, the highest since May 2022.

U.S. President Donald Trump pressed Iran on Wednesday to negotiate a nuclear deal, warning that Washington would respond more forcefully than it did in last year's attack on Iranian nuclear facilities.

Tehran responded by threatening retaliatory action against the U.S., Israel and their allies.

The U.S. Federal Reserve held rates steady on Wednesday, with investors now looking to Trump's announcement of a new central bank chair, and expecting the next interest rate cut to be in June.

The U.S. dollar remained on shaky ground, after it hit a four-year low on Tuesday on comments from Trump brushing off its recent weakness. A weaker dollar makes greenback-priced gold more attractive to overseas buyers .

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Against an uncertain geopolitical and economic backdrop, "further gains are possible for (gold) which could rise above the $6,000 level and, after a period of consolidation, move towards $7,000 by year-end," said ActivTrades analyst Ricardo Evangelista.

Spot silver was up 1% at $117.79 an ounce after hitting a record high of $120.45. It has gained nearly 64% so far this year as investors diversify away from gold, with persisting supply deficits and momentum buying providing further support.

"Silver's squeeze means $130 is in sight with long-term industrial demand underpinning support," Nemo.money's Dutta added.

Spot platinum climbed 1.4% to $2,735.15 an ounce, having hit a record high of $2,918.80 on Monday, while palladium eased 1% to $2,052.75.