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Gold ends at highest since Aug. 20; best 7-day run since 2007

AP

Gold rose more than 1 percent on Tuesday to a 4-1/2 month high as uncertainty over the extent of a stimulus program the European Central Bank is expected to unveil on Thursday drove investors into assets seen as lower risk.

Buying accelerated on a break of the previous day's high, dealers said, as stops were triggered, taking the metal to a session high of $1,294.10 an ounce.

U.S. gold futures for February delivery settled up 1.4 percent, at $1,294.20 an ounce. The metal has gained for seven sessions of consecutive. It has increased about 7 percent during that period, its strongest seven-day run since September 2007.

Spot gold was last up 1.2 percent at $1,292 an ounce.

Jittery financial markets are focused on Thursday's ECB meeting, at which the bank is widely expected to unveil a quantitative easing program, and a Greek election on Sunday, which polls suggest anti-bailout party Syriza will win.

"Nervousness ahead of the Greek election and the ECB's next meeting suggests that any investors who are long gold are likely to hold onto those positions, at least until there is a little more clarity on the likely fate of the euro," Mitsui Precious Metals analyst David Jollie said.

Gold posted its biggest weekly gains last week since mid-August as risk aversion was stoked by the Swiss National Bank's decision to scrap the franc's peg against the euro.

That led to a rise in investment in gold exchange-traded products (ETPs), which issue securities backed by physical metal. The world's largest gold exchange-traded fund saw its biggest one-week inflow in 2-1/2 years last week.

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"Ahead of major risk events such as ECB and the Greek election, buying interest has been on the rise," Saxo Bank's head of commodities research Ole Hansen said.

"Gold is maintaining its premium over platinum, which also indicates that some safe-haven plays are being initiated. The current focus has moved from deflation and the rising dollar to market risk and negative interest rates."

Growing worries over the global economy also added to gold's appeal as a safe store of value, as the International Monetary Fund cut its global growth forecast for 2015.

In a glint of brightness, China reported its economy had not slowed as much as many had feared, helping to lift stock markets in Europe and buoy the dollar.