Gold jumped as much as 2 percent on Tuesday after its biggest one-day drop this year, as the dollar slid and investors sought safe havens as oil plunged and an emergency rate hike by Russia failed to stabilize the ruble.
The dollar index fell 0.7 percent, its biggest one-day drop since mid-October, as turmoil in global foreign exchange markets drove investors to the safety of the yen and the Swiss franc.
Spot gold was last up 0.9 percent at $1,202 an ounce, off a high of $1,221.40 and recovering after a 2.5 percent plunge in the previous session. U.S. gold futures for December delivery pared earlier gains and was last down 0.3 percent at $1,204 an ounce.
Risk aversion is lifting gold, with oil reaching new lows and geopolitical tensions ratcheting up with the slide in the rouble and aggressive action by the Russian central bank to counter this, Mitsubishi analyst Jonathan Butler said.
"The rebound in the euro and the yen today has given some much-needed support to gold by depressing the U.S. dollar on a relative basis," he said.