Gold eyes $1,000/oz as investors flee stocks

By David Sheppard

LONDON (Reuters) - Gold jumped to a 4-month high above $980 an ounce on Tuesday and was eyeing the psychological $1,000 level as investors fleeing financial market turmoil sought refuge in the precious metal.

Spot gold hit $983.50 an ounce, the highest since March 19 before easing to $982.900/983.90 an ounce at 6:16 a.m. EDT, against $971.20/972.20 late in New York on Monday.

Gold has risen by more than 7 percent in the past week on financial uncertainty, a sliding dollar and record high oil.

UBS this week forecast gold prices would average $1,000 an ounce in July.

"The dominant change of the last couple of weeks has been increased fears of systemic financial risk," said metals analyst John Reade at UBS.

"There's a lot out there at the moment -- inflation and stagflation fears, the dollar's fall and geopolitical problems but the move higher has primarily been triggered by rising financial risk aversion."

The latest bout of uncertainty was triggered by fears for the future of U.S. mortgage giants Freddie Mac (FRE.N: Quote, Profile, Research) and Fannie Mae (FNM.N: Quote, Profile, Research).

That hit banking sector stocks and reinforced systemic risks.