Gold prices have risen to a 16-week high, as weak US consumer confidence data raises doubts about the sustainability of the recovery.
The Conference Board's consumer confidence index declined to 78.1 in February, from 79.4 in the previous month. Signs of a slowdown in the US economic recovery have multiplied in recent weeks, with manufacturing and employment numbers coming in below expectations.
Gold for April delivery, the most active contract, rose 0.4 per cent to close at $US1,342.70 per troy ounce on the Comex division of the New York Mercantile Exchange, marking its highest level since October 30.
The rise adds to a 11 per cent increase in gold prices this year, as investors buy the precious metal on US economic concerns and, more recently, fears that Ukraine could suffer a sovereign debt default after the ouster of its president.
Some investors buy gold as a hedge against economic and political uncertainty, believing it will hold its value while other assets fall.
The recent spate of weak US economic data have "reinforced the notion that while the Federal Reserve will likely continue cutting its economic stimulus, it is nowhere near raising interest rates," said Peter Hug, director of the precious-metals division at Kitco Metals in Montreal.
Investors are also using gold to hedge their bets on US stocks, as the S&P 500 approaches record highs, Hug said.
"There is some uneasiness about the economy and the stock market going so high, and people are using gold as a safety valve," he said.
Gold prices have received a boost from instability in Ukraine, as concerns mount that the country could default on its debt, with yields on Ukrainian bonds rocketing higher while the country's currency sinks to all-time lows.
Russian officials on Tuesday said Moscow wasn't legally bound to give Ukraine the rest of a desperately needed $US15 billion ($A16.65 billion) aid package, after the opposition removed Moscow-supported President Viktor Yanukovych from power over the weekend, forcing him to flee the capital and go into hiding.
Economic unease in the US and abroad have helped gold "confound the nonbelievers and push further ... as investors gain confidence in the current uptrend," analysts at TD Bank said in a note to clients.
That move could be tested as gold prices approach the psychologically important $US1,350 per ounce level, TD Bank said.
London PM Gold Fix: $1339; previous PM $1334.75
Apr gold $1,342.70, up $4.70; Range $1343.60-$1331.20
Mar silver $21.963, down $0.88; Range $21.745-$22.005
Apr platinum $1,442.60, down $1.20; Range $1,434.30-$1,445
Mar palladium $736.10, up $6.95; Range $734.05-$743.30
