Gold jumped more than 1.5 percent on Friday, breaking above $1,400 for the first time since September 2013, as hints of a rate cut from the U.S. Federal Reserve took a toll on the greenback and US Treasury yields.

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Tensions in the Middle East also boosted gold's rally, which has lifted the precious metal nearly $80 or 5 percent this week and almost 10 percent so far this year.

Spot gold was up 1.4 percent at $1,406.81 per ounce as of 0305 GMT, after earlier hitting its highest since September 4, 2013, at $1,410.78.

Gold is set to post its biggest weekly gain since the week ended April 29, 2016, and was also on track for its fifth consecutive weekly rise.

US gold futures rose 1 percent to $1,410.70 an ounce.

"The dovishness of the Fed and ECB, geopolitical tensions in the Middle East, and a technical breakout above $1,350 with volumes gave strong support for the metal," said Jigar Trivedi, a commodities analyst at Mumbai-based Anand Rathi Shares & Stock Brokers.

"Momentum is positive for the next half of the year. The way prices have risen, there could be a technical profit-booking, but the undertone is positive," he said.

The Fed earlier this week said it was ready to battle growing global and domestic economic risks, hinting at interest rate cuts beginning as early as next month.

With the Fed possibly easing its policy soon, and other central banks such as the European Central Bank (ECB) and the Bank of Japan likely to follow in their wake, government bonds were on a bullish footing.

"A global wave of monetary policy easing has the impact of pushing global bond yields lower and is a key positive driver for gold," said Heng Koon How, head of markets strategy at Singapore's United Overseas Bank

The dollar was set for a weekly loss against major currencies, and the US benchmark 10-year Treasury yields dropped below 2 percent for the first time in more than 2-1/2 years.

"We maintain our ... bullish call for gold and it looks like our mid-2020 target of $1,450 may be reached much sooner," How said.

Adding to the global anxiety were fresh worries about Middle East tensions after Iran shot down a U.S. military drone, raising fears of a military confrontation between Tehran and Washington.

Among other precious metals, silver gained 0.5 percent to $15.50 per ounce, its highest in nearly three months and on track to post its biggest weekly percentage gain this year.

Platinum climbed 1.5 percent to $814.26 per ounce. Palladium rose 1.2 percent to $1,495.47.