Spot gold rose 0.4% to $1,733.55 per ounce by 12:20 pm EST Friday, after falling 1.4% in the previous trading day. Gold futures rose 0.8% to $1,736.20.

On Thursday, the Chinese government announced its intention to impose a national security law that criminalizes political dissent in the city of Hong Kong, which could fuel further protests and escalate the ongoing US-China spat over the source of the coronavirus.

US senators later responded by introducing a bipartisan bill that would sanction Chinese officials and organizations that enforce the new security measures in Hong Kong. The bill came just one day after the Senate passed a bill that would make it more difficult for Chinese-based companies to list on US stock exchanges.

Amid the growing political and economic uncertainties, bullion — often considered insurance under such circumstances — surged to a fresh seven-year high earlier this week.

“China’s aggressive stance on Hong Kong security could exacerbate already tense relations (with US) and a possible confrontation between US warships and Iranian freighters headed for Venezuela are key concerns heading into the long weekend, prompting investor buying,” Tai Wong, head of base and precious metals derivatives trading at BMO, told CNBC.

Gold has held its ground above the key $1,700 per ounce level, building impetus to reach its 2011 peak in the coming quarters, Fitch Solutions said in a note.

“Lower-for-longer interest rates with quantitative easing in full swing, macro and geopolitical uncertainty and strong investor flows should continue to support gold prices on a 6-12 month horizon,” Fitch said.

Meanwhile, physical gold demand picked up in top Asian hubs this week as economies eased lockdown measures and investors continued to buy gold as a hedge against a deteriorating economic backdrop.