Due to the weakness in dollar along with easing of Dubai debt fears, the prices of gold surpassed $1,200 an ounce Tuesday and closed at a record high.

Before backing off and settling up $18 to $1,119.10, U. S. gold futures for December delivery touched an intraday high of $1,202.70 an ounce.

Carlos Sanchez, analyst at CPM Group, expressed, "Concerns about geopolitical events have been pushing investors to seek safe-haven assets. Gold is seen as a hedge against that volatility."

Friday witnessed a plunge by 5% in gold prices because of continued worries about the state-run investment company of Dubai urging a postponement of $60 billion in debt.

However, the reports that came on Tuesday forwarded that Dubai World was in negotiations over $26 billion of its debt, easing concerns it would default on the total balance. It should be noted that this relief transformed into a hit for the dollar, since the U. S currency was lower by increased risk appetite.

Since gold and other commodities are priced in dollars around the world, the weakening of dollar tends to increase the prices of the gold.

Following an announcement by the Bank of Japan regarding pumping more liquidity into the financial system while holding rates at 0.1%, the dollar also pared gains against the yen.

However, there are hopes for the prices to reduce soon and trade in a tight range before moving higher than $1,200. He continued that it took about one week for gold to move from $1,100 to $1,160 an ounce.

November proved to be a lucky month for gold as its prices rose more than 34% in 2009 so far. As of 2nd January, gold was $890 an ounce and it plummeted to $818.90 on 15th January.