Gold hit a 12-week high on Tuesday as investors sought refuge from volatility in the wider markets, with a slide in crude oil prices to their lowest in nearly six years fueling turbulence in stock markets and currencies.
The gold price peaked at $1,243.60, its highest since mid-October, before retreating as European stocks turned higher and the dollar recovered from an early low. It remained elevated, however, thanks to the depressed oil price.
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Spot gold was up 0.3 percent at $1,237.43 an ounce at 1255 GMT, while U.S. gold futures for February delivery were up $5.20 an ounce at $1,237.90.
Gold has risen nearly 5 percent this month as equities, which were boosted last year by hopes that the U.S. economy was on the road to recovery, have come under pressure. Strength in stocks helped to push down gold prices by 1.5 percent in 2014.
"There is an element of beginning-of-the-year exuberence in gold, carrying over from the relative weakness in the equity markets at the moment," Mitsubishi analyst Jonathan Butler said.
"That gold can rally despite the dollar being relatively strong says something of the uncertainty regarding the U.S. economy. There's a question over whether we'll revert to gold as a safe haven, as we've seen in recent days, or if U.S. growth is going to pull through and ultimately drive the dollar higher, with negative implications for gold."
European stocks turned higher, having fallen in early trade after a fresh drop in oil prices hit energy stocks. Brent crude oil futures slid 4 percent to their lowest in almost six years.
The dollar index rose after the U.S. currency skidded to its lowest level against the yen in a month as Treasury yields fell because of increased demand for safe-haven assets against the backdrop of plunging oil prices.
Silver was up 2.2 percent at $16.89 an ounce while platinum returned to parity with gold after spending most of the past 18 months at a premium to the yellow metal.
Spot platinum was up 0.3 percent at $1,241.50 an ounce, while spot palladium gained 1 percent to $814.50 an ounce.
"Gold has been leading the move higher so far in 2015 and the rest of the precious metals have mostly been followers," UBS said in a note. (Additional reporting by A. Ananthalakshmi in Singapore; Editing by William Hardy and David Goodman)