Gold climbs as investors seek refuge from volatility

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Gold hit a 12-week high on Tuesday as investors sought refuge from turbulence in stock and currency markets after crude oil prices slid to a near six-year low.

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, as oil prices languished.

Spot gold was up 0.5 percent at $1,238.90 an ounce, while U.S. gold futures for February delivery were up $6.50 an ounce at $1,239.30.

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 push gold prices down 1.5 percent in 2014.

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"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.

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"The fact that gold can rally despite the dollar being relatively strong says something of the uncertainty regarding the U.S. economy," he said. "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 on Tuesday turned marginally higher, having fallen in earlier trade after a fresh drop in oil prices hit energy stocks. Brent crude oil futures fell 4 percent to their lowest in almost six years.

The dollar index crept up after the U.S. unit earlier skidded to its lowest level against the yen in a month, as Treasury yields fell on increased demand for safe-haven assets against a backdrop of plunging oil prices.

Silver was up 2 percent at $16.85 an ounce.

Platinum returned to parity with gold after spending most of the last 18 months at a premium to the yellow metal. Spot platinum was flat at $1,237.30 an ounce, while spot palladium was up 0.2 percent at $807.90 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 on Tuesday.