Investors have flocked to the safe-haven investment of gold as hostilities between Israel and Hamas in the Gaza Strip intensify, lifting the price of the precious metal for a fourth consecutive week.
Political tension in India and Pakistan is also boosting gold's appeal.
Spot gold was $US885.35 ($NZ1558.71) per ounce in Sydney yesterday, up $US44.70 ($NZ78.69) from Wednesday's close of $US840.65 ($NZ1480.01).
Shares in gold producers were also higher on the Australian stock exchange on Monday.
Lihir Gold jumped 17 cents, or 6.05 per cent, to $2.98, Newcrest rose 59 cents, or 1.86 per cent, to $32.37 and Newmont gained 26 cents, or 4.74 per cent, to $5.74.
Analysts say investors had largely ignored gold in recent months in favour of currency.
But the increase in the gold price this month shows that the precious metal is once again being bought amid geopolitical tension.
CMC Markets market analyst David Taylor said he expected the return to gold investment would continue in early 2009 but could taper off in the second half of the year should the global financial outlook improve.
"As we hit the middle of the year, we might start to get some indication that the US housing market is starting to turn around, and maybe the second half of 2009 might see the equity market respond to that and turn up a little bit," Mr Taylor said.
"Gold has been a safe haven for the last little while but has suffered from the fact that people wanted to hold cash recently. . .people were de-leveraging.
"As long as people don't need to de-leverage and as long as the rest of the market behaves in a normal way, we might see gold stay as a safe-haven investment.
"Towards the end of next year, the world economy is going to be not great but it will be a lot better than it is now and the attractiveness of gold will not be as strong as it is at the moment."
The gold price passed $US1000 an ounce in March but fell to $US712.50 an ounce in October.
Gold was trading at $US778.00 an ounce in New York on December 1.
On Friday, gold futures for February delivery climbed $US23.20, or 2.7 per cent, to $US871.20 an ounce on the New York Mercantile Exchange.
