LONDON, Feb 17: Gold rose more than 2 per cent to a seven-month high in Europe on Tuesday on reports eastern Europe will be more affected by recession than elsewhere and after Russia’s central bank said it plans to buy more gold.

The precious metal rallied to new highs in a raft of currencies, including the euro, sterling, the South African rand, the Indian rupee and the Canadian and Australian dollars.

Spot gold climbed to $959.90/961.50 an ounce from $940.90 in New York late on Monday. Earlier it touched a high of $962.95 an ounce, its firmest level since July 22.

Fears over the prospect of a deepening recession in eastern Europe boosted gold prices, as risk-averse investors sought out the precious metal as a safe store of value.

While investment in products like gold-backed exchange traded funds has soared as investors seek a safe place for their cash, high prices are hurting jewellery demand in key centres of gold buying, India, China and the Middle East.

Buyers in India, usually the world’s leading market for gold, ignored the wedding season and postponed purchases as they grappled with high prices, traders said. The flow of scrap supply gained momentum.

Nobody is interested in buying, Daman Prakash, director of Chennai-based wholesaler MNC Bullion, said.

The benchmark April gold contract traded in India peaked at 15,227 rupees per 10 grams, boosted by safe haven buying and a weak rupee.

Gold shrugged off moves in its usual external drivers, crude oil and the dollar. The dollar, which normally moves in the opposite direction to gold, rose to two-month highs versus the euro, also benefiting from rising risk aversion.

Among other precious metals, spot silver climbed to $13.85/13.91 an ounce from $13.57.Spot platinum edged up to $1,074/1,079 an ounce from $1,063.

Gold movements are likely to continue to push platinum for the time being, said Fairfax analyst Marc Elliott in a note. —Reuters