Weaker US data and ongoing expectations of tighter UK monetary policy have helped boost gold and sterling respectively as the dollar loses ground.
With some raising questions over the strength of the US economic recovery, data showing US retail sales had unexpectedly fallen in January weighed on the dollar overnight, in turn pushing gold back above $1,300.
The precious metal rose to $1,308 this morning, its highest level since early November, in the latest sign of a renaissance for bullion following steep falls last year.
Dovish comments made by Federal Reserve chair Janet Yellen earlier this week, coupled with jobs figures that appear to have been hit by the poor winter weather, have prompted a pause in the dollar's recent upswing.
US dollar weakness was underlined by continued falls against sterling: the pound rose above $1.67 this morning, within sight of a three-year high reached in April 2011.
While US data has disappointed, the Bank of England's changes to its forward guidance policies have added weight to the assumption the UK could hike rates before the US.
Sterling is now on course for a 2% rise this week, its biggest weekly gain since June 2013.
PIMCO's Bill Gross said on Wednesday the UK is now the "leader of the tightening pack" following the release of the BoE's inflation report.
That is despite Bank of England Governor Mark Carney saying on Wednesday rates will now be on hold "for some time to come".
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