LONDON: Gold prices struck near six-year highs Friday as a weaker dollar and escalating US-Iran tensions fuelled a flight to haven assets, while oil futures built on strong gains.

It comes at the end of an eventful week for stock markets, crude prices and the dollar -- and as investors look ahead to a key G20 summit hoping to deliver progress on the US-China trade war.

"Gold has been one of the week's biggest stories, with the precious metal hitting $1,400 (an ounce) for the first time in almost six-years overnight," noted Joshua Mahony, senior market analyst at IG trading group.

"The gold spike is driven by risk-off sentiment alongside dollar weakness, with overnight talk of a cancelled US strike on Iranian targets highlighting how close we are from a huge ramp-up in conflict between the two nations."

US President Donald Trump on Thursday approved but then scrapped strikes against Iranian targets, The New York Times reported.

Oil prices rose further Friday but the gains were far less sharp compared with a day earlier when crude futures surged about 4.5 percent on the rising tensions between the US and Islamic Republic.

Fears of a conflict in the oil-rich Middle East ratcheted up Thursday when Tehran said it had shot down a US "spy drone" that was violating its airspace, which Washington said was over international waters.

The US authorities then banned American civilian aircraft from the area, and airlines including British Airways, Qantas and KLM on Friday suspended flights over the Strait of Hormuz, situated close to where the drone incident occurred.

Recent attacks on tankers close to the Strait, a key shipping lane in the Gulf region through which nearly one-third of the world's oil is transported, sent oil prices surging late last week.

- 'Gold's perfect storm' -

But it was gold's turn to take centre stage on Friday, with the commodity reaching $1,412.08 an ounce, the highest level since September 2013.

"A slowing global economy, imminent US rate cuts and rising geopolitical tensions provide a near perfect storm for gold bugs -- and while this trio of factors remain in place the rally... will remain well supported," said XTB chief market analyst David Cheetham.

Demand for gold has surged after the Federal Reserve on Wednesday indicated it would likely cut interest rates soon -- for the first time in a decade -- which sent the dollar tumbling across the board.

By contrast, stock markets have risen strongly this week after the Fed opened the door to a potential interest rate as soon as July.

The dollar's losses have however been capped with both the ECB and Bank of England also presenting dovish outlooks for eurozone and British interest rates amid growth weakness, in part owing to Brexit uncertainty.

"With central banks having set out their stalls, it's now over to the presidents of the US and China next week to really blow investors away and push forward with trade talks," said Craig Erlam, senior market analyst at Oanda.

Markets' focus is also firmly on next week's planned meeting between Trump and his Chinese counterpart Xi Jinping on the sidelines of the G20 in Japan.

Trump's tweet about "a very good telephone conversation" between the pair this week fuelled hopes for a deal to end their countries' long-running trade war that has impacted the world economy. —AFP