Gold futures have jumped to a three-week high as investors turn to the asset for safety amid a steep sell-off in stocks, oil, copper and other risk markets.
The most actively traded gold contract, for February delivery, on Monday rose $US17.80, or 1.5 per cent, to finish at $US1,204 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices jumped with the opening of Monday's trading session and continued to edge higher throughout the day.
Gold benefited from its haven appeal as renewed worries about sovereign Greek debt rippled through stocks, commodities and other risk markets, analysts and brokers said.
Greece's general election will be held later in January with some candidates campaigning on a platform of rethinking austerity measures intended to stabilise its finances.
In addition, investors expect the European Central Bank to expand its economic stimulus measures at its first policy meeting of the year on January 22, or by March at the latest.
Such a move could weaken the euro, making gold and the US dollar more attractive to investors.
The US dollar also gained Monday, rising 0.3 per cent against a basket of global currencies in the ICE US Dollar Index.
"You've got a lot of uncertainty with what's going on in Greece and what the ECB's ultimately going to do," said Bill Baruch, a senior market strategist at wholesale brokerage ii Trader in Chicago.
Still, many analysts remain bearish on gold's prospects in the longer term, with Barclays taking note of various metrics that reflect an improving economy in the US, adding to expectations of a US interest rate increase in 2015.
"Gold is set to come under significant pressure," the bank said in a note.
Settlements (ranges include open-outcry and electronic trading):
London PM Gold Fix: $US1,200.00; previous PM $US1,172.00
Feb gold $US1,204.00, up $US17.80; Range $US1,177.80-$US1,204.40
Mar silver $US16.213, up 44.5 cents; Range $US15.630-$US16.260
Apr platinum $US1,210.90, up $US7; Range $US1,197.80-$US1,219.00
Mar palladium $US793.20, down $US1.65; Range $US792.05-$US805.10
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