Investor demand pushes gold higher

Gold neared US$1,300/oz on Tuesday following further US dollar weakness and investor demand.

The yellow metal ended up US$8.35/oz at US$1,294/oz in London, its highest close since January 2015.

The rise came as the buck traded in the 86-87 euro cents range, down about half a cent and its lowest point since August.

Prices were also supported by inflows to gold ETFs (exchange traded funds), with the SPDR Gold Trust seeing its highest daily inflow since 2011, Commerzbank said.

OUTLOOK

Analysts remain divided over the near-term outlook.

The recent price rise is on shaky footing, according to Commerzbank, as it was partly based on speculative buying interest, in addition to expectations of low interest rates.

But ABN AMRO precious metals and FX strategy coordinator Georgette Boele expects further strength.

"We think that the positive momentum is here to stay and that prices will rally further during the course of this year and next year," she said. Silver closed 36 cents lower at US$17.49/oz.