Gold price extends fiscal cliff gains, hits two-week high

Gold for February delivery added $13 ending the trading day at $1,688.80 an ounce on the New York Mercantile Exchange, following a US Congress vote on a Senate deal to avoid the fiscal cliff.

Earlier on Tuesday the metal touched a high of $1,695, a level last seen mid-December.

Investors have been worried that the nearly $600 billion worth of spending cuts and tax increases could put the country's economy in danger of sliding back into severe recession.

"Outstanding issues are boosting support for gold," Brien Lundin, editor of Gold Newsletter, told Marketwatch adding that “a number of issues remain, and compromise will likely be a negative for the economy."

Gold ended 2011 at $1,564 an ounce and the $113 or 7% increase in 2012 means the yellow metal has now enjoyed a dozen years of consecutive gains.

Despite widespread criticism of the ad hoc nature of the fiscal cliff deal, the news gave a huge boost to stocks and oil.

Shares in New York enjoyed the best performance in more than a year with the Dow gaining more than 300 points and scoring the best ever first day of annual trade.

International benchmark oil – ICE February Brent – rose to a 2-and-a-half month high while the US crude price point of West Texas Intermediate gained more than 1% to $92.95 a barrel.