NEW YORK (MarketWatch) -- Gold futures breached $970 an ounce Tuesday, rising to the highest level in seven months as investors seeking a safe haven against economic troubles bought into the metal.

Heightened risk aversion also pushed up the U.S. dollar and Treasury prices, while oil futures and global stock markets skidded. Safe-haven buying raised holdings in the largest gold exchange-traded fund to a new record high near 1,000 tons, according to latest data.

Gold for February delivery rose $28.80, or 3.1%, to $970.30 an ounce on the Comex division of the New York Mercantile Exchange, the loftiest level for a front-month contract since July.

onday's gain followed on gold's 3% increase last week. The metal is now just about $33 below its record high above $1,003 an ounce set in March 2008.

Meanwhile, the April gold contract traded more actively, hitting $972 an ounce, up 3%.

"I think $1,000 is pretty much almost in the cards here just given how strong the trend has been," said Brian Hicks, co-manager of the U.S. Global Investors Global Resources Fund.

The strong demand for gold is "a reflection of just how concerned investors are becoming about the ongoing volatility in the equity market as well as the financial crisis," he added.

Gold holdings in SPDR Gold Shares, the largest gold exchange-traded fund, rose 1.6% from a day ago to 985.86 tons on Friday, according to latest data. That's up more than 180 tons from a month ago.

The SPDR Gold Trust (GLD 95.63, +3.08, +3.3%) added 3% to $95.33.

In spot trading, the London afternoon gold-fixing price -- a benchmark for gold traded directly between big institutions -- stood at $968 an ounce Tuesday, up $25.50 from the previous day.

In other metals trading, March copper tumbled 7.4% to $1.425 a pound, while March silver rose 3.6% $14.11 an ounce. March palladium added 1.2% to $219 an ounce, and the April contract for sister metal platinum rose 2.9% to $1,091.70 an ounce.

Deepening gloom
U.S. stocks slumped Tuesday, with the Dow Jones Industrial Average down more than 250 points. Asia and Europe shares also moved lower, with the banking sector sliding on concerns the global economic crisis is deepening.

Moody's Investors Service flagged concerns about European banks' exposure to Eastern European economies.
"Gold is moving as the last phase of the crisis appears to have started," said Martin Hennecke, associate director with Tyche Group in Hong Kong.

Gold prices, which tend to move in opposite directions to the U.S. dollar, have moved in tandem with the greenback recently, as risk aversion lifted both the dollar and gold. The dollar index (DXY: 87.77, +1.11, +1.3%) , which tracks the value of the greenback against its major rivals, rose 0.4% to 87.515. (GFI: 12.07, +0.90, +8.1%) rose 2.3% to $11.43.

In equities, shares of Barrick Gold Corp. (ABX: 38.81, +0.87, +2.3%) , the world's largest gold-mining company, gained 1.6% to $38.58, while Goldcorp Inc. (GG: 32.73, +0.98, +3.1%) added 2% to $32.35 and South Africa's Gold Fields Ltd.

The Amex Gold Bugs Index (HUI: 327.31, +16.15, +5.2%) , which tracks the share prices of major gold companies, added 2.5% to 318.81.

The iShares Gold Trust ETF (IAU: 95.75, +3.14, +3.4%) also rallied, up 3.1% to $95.43, while the iShares Silver Trust ETF (SLV: 14.02, +0.48, +3.5%) rose 2.4% to $13.87

Moming Zhou is a MarketWatch reporter based in New York.
Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong.