Gold hit a 2010 high above $1,180 an ounce on Friday, gaining 1 per cent as a widening euro zone sovereign debt crisis prompted investors to buy the
metal asset in a flight to safety.

The precious metal has rallied almost 6 per cent in April, its biggest one-month rise since November, as credit ratings downgrades of Greece, Spain and Portugal unleashed a wave of risk aversion, channeling money into gold.

Michael Daly, gold specialist at futures broker PFGBest, said that gold tends to outperform other commodities in times of crisis, and the currency of choice is gold for investors who worry about the viability of fiat currencies.

"In the last few days, it has almost turned into panic-type buying. Every time you hit the wire, the European crisis worsens, and it's worsening day by day," he said.

"Gold is taking on legs of its own right now. It's a flight to safety."

Spot gold rose a high of $1,181.05 an ounce on Friday, the firmest since December 4. It was at $1,178.55 an ounce at 2:27 pm EDT (1827 GMT), against $1,166.10 late in New York on Thursday.

The metal ended the week nearly 2 per cent.

US June gold futures settled up $11.90, or 1 per cent, at $1,180.70 an ounce on the COMEX division of the NYMEX.

Financial markets were settling down slightly, helping the euro to rally, on hopes that a multibillion-euro aid package for Greece would be hammered out within days and prevent the crisis from spilling over to other countries.

But the fear of contagion was clearly evident in gold, analysts said, with prices on track to move back toward their December high, a record peak of $1,226.10 an ounce.

"Gold has had quite a big move this month," said Nick Bullman, managing director of Bullman Investment Management. "The buying has been based on default issues in Europe and other debasement of currencies."

The euro climbed against the U.S. dollar for a third straight day as expectations that Greece will soon receive emergency aid helped calm jitters about how Athens will pay its huge debts. It is on track to lose 2 percent this month.

Earlier this week, fears about paper currencies also lifted gold to record highs when priced in euros, sterling and Swiss francs. Gold also set a 2010 peak in terms of Australian dollars, and its highest in yen terms since 1983.