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Gold soars on investor worries over strength of world economy

Investors are set to move away from assets such as currencies and towards gold.

The price of gold soared to a new high - $1,270 an ounce - on Tuesday, as investors sought secure investments amid worries over the state of the world economy.

The biggest single-day increase in four months came even as the dollar fell against the yen and the Swiss franc.

Gold has traditionally been seen as a "safe-haven" investment during times of economic uncertainty. The price of gold has risen 16 per cent so far this year. Analysts say it is set to increase further as investors move away from assets such as currencies, equities and sovereign debt.

Meanwhile, the fall of the dollar - to a 15-year trading low against the yen - has compounded the rise in the strength of gold.

Gold prices were being supported by "economic uncertainties", including a recent spate of weak data, and an "ongoing search for less volatile and more diversified assets", said Marcus Grubb of the World Gold Council, in a report by the Times.

Persisting concerns over public debt levels and the health of the euro after the Greek crisis this year, further stoked strong demand from European retail investors, the report added.