By Jan Harvey
LONDON (Reuters) - Gold hit a seven-week peak on Friday and silver its highest since January last year as the Bank of Japan's decision the previous day to hold off expanding monetary stimulus weighed on stock markets and the dollar.
The U.S. unit posted its biggest daily loss against the yen in more than five years on Thursday after the BoJ decision, and fell another 0.3 percent against a currency basket on Friday. That lifted precious metals, which are priced in dollars.
Spot gold was up 0.7 percent at $1,274.52 an ounce at 0930 GMT, having earlier peaked at $1,280.60 an ounce. U.S. gold futures for June delivery were up $10.70 an ounce at $1,277.10.
For the week, the metal is up 3.5 percent in what would be its biggest weekly jump since the week ended Feb. 12.
The Federal Reserve's decision on Wednesday to leave interest rates unchanged also supported bullion. The Fed kept the door open to a hike in June, but showed little sign it was in a hurry to tighten monetary policy.
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"Investors' confidence is in jeopardy after the Bank of Japan's decision, and further fuel has been added by U.S. corporate earnings," Ava Trade's chief market strategist Naeem Aslam said.
"The FOMC statement released earlier has not supported sentiment, and all these elements have added to one thing - risk off trade. Hence we are experiencing this surge in the gold price. The next level of 1300 is very much reality now."
Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
U.S. data on Thursday supported views the Fed will take a cautious stance in hiking rates this year. U.S. economic growth braked in the first quarter to its slowest pace in two years.
Silver was up 1.4 percent at $17.77 an ounce. The metal has risen 15 percent this month and is on track for its biggest monthly rise since August 2013, as it plays catch-up after lagging gold during its first-quarter surge.
"(Thursday's rally in silver) rounds off four consecutive sessions of higher highs and higher lows, which reinforces our bullish view for the metal," ScotiaMocatta said in a note.
The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, fell to a 6-month low on Friday of 71.8, down from 81.3 at the start of the month.
Platinum was up 1.3 percent at $1,058.50 an ounce, while palladium was up 0.3 percent at $622.78 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore, editing by David Evans)
