Gold on Friday clung to sharp overnight gains that pushed the metal to a one-year high, and looked set to post its best week in over four years as stock market turmoil stoked safe haven demand.     

Asian shares slid as mounting concerns about the health of European banks further threatened a global economic outlook. MSCI's global stock index closed more than 20 percent below its all-time high.      Safe-haven assets shone across the board. US 10-year Treasury yields hit their lowest since 2012 and the Japanese yen climbed to its highest in 15 months against the dollar, while money continued to flow into gold-backed exchange traded funds.    
Spot gold rose to $1,260.60 on Thursday, its highest in a year, before paring some gains to close up 4 percent in its biggest daily gain in about 2-1/2 years. On Friday, it eased 0.9 percent to $1,235.85 by 0335 GMT.     

"We are seeing a flight to quality," said a Sydney-based trader. "ETFs have been accumulating the metal for some time now. They are one of the main drivers (of the gold rally) along with the equity markets which are extremely soft."     Assets in SPDR Gold Trust, the world's top gold ETF, rose 2 percent on Thursday, the biggest inflow in two months.      Total holdings of the top eight gold ETFs  have risen by 3.8 million ounces so far this year, after three straight years of decline.     

The risk-off sentiment has made gold the best performing commodity in 2016, ANZ said, while others predicted further gains.     "$1,300 would be possible if stocks don't stop falling," said Yuichi Ikemizu at Standard Bank in Tokyo.     Jeffrey Gundlach, the co-founder and chief executive officer of DoubleLine Capital, said gold is likely to reach $1,400 as investors lose faith in central banks.      For the week, spot gold is up 5.5 percent, the biggest weekly gain since October 2011. U.S. gold futures are set to post a gain of nearly 7 percent for the week, the sharpest such jump since 2008.     
Also helping gold was dovish comments from Federal Reserve Chair Janet Yellen, who stressed that the U.S. central bank was not on a "pre-set" path to return policy to "normal" amid a worsening meltdown in global stock markets.      Though Yellen said she still expects the Fed to gradually raise rates this year, federal funds rate futures have almost completely priced out the chance of a rate hike.