Gold jumps above $1,230/oz as investors seek refuge

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Gold rose above $1,230 an ounce and neared a one-year high on Wednesday, acting as counter against risk alongside top-rated government bonds as oil's earlier weakness rippled into global equity markets.

Spot gold rose as much as 2.1 percent to a session high of $1,252.91 an ounce, just shy of a one-year high of $1,260.60 reached on Feb. 11.

The market's rediscovered role as a shelter for risk-averse investors seemed to be gaining traction, traders and analysts said, even as the dollar gained ground against a basket of major currency rivals. The dollar fell later in the day.

"Gold is rising on the back of weak risk appetite, but what stands out today is that the market is rising even though the dollar is higher as well," Jens Pedersen, senior analyst at Danske Bank, said when the greenback was firm.

Manipulation in the gold market?

"We've definitely reached a new range above $1,200 due to re-pricing risks of Fed rate hikes," Pedersen said. He added that further sustained gains may be capped until the path for monetary policy is clearer.

Technically, gold looks set to test recent highs at a one-year top of $1,260, MKS Group said in a note.

Stocks across the globe fell on concerns over economic growth but were off their session lows after crude oil futures turned higher following U.S. inventory data.

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New U.S. single-family home sales tumbled in January, while other data showed the services sector contracted in early February for the first time since October 2013.

"Reports lately have been showing continuing signs of weakness," said Miguel Perez-Santalla, vice president of Heraeus Metal Management in New York.

"The gold market obviously is telling us that the market is starting to believe that there is certainly reason for concern."

Dallas Federal Reserve President Robert Kaplan, who advocates a patient approach to policy tightening in the wake of global headwinds, said he does not expect the United States to enter recession this year.

Assets in SPDR Gold Trust, the top gold-backed ETF, are at their highest since March 2015. The fund's inflows since the beginning of the year have already surpassed outflows for the whole of 2015, lending support to gold prices.