NEW YORK/LONDON (Reuters) - Gold hit record highs above $1,200 an ounce yesterday as investors bought the precious metal as an alternative investment amid dollar weakness and economic uncertainty after the Dubai credit woes.

Strength in gold lifted other precious metals, with silver and palladium rallying to their strongest level since July 2008, and platinum hitting its highest since August last year.

Bullion has risen 15 percent since the start of November.

So far this year it has gained 36 percent on a combination of worries about paper currency depreciation, inflation and doubts about a nascent economic recovery.

"It is like a perfect storm for gold, with the currency situation, and with Dubai rekindled the concerns about economic crisis," said Bill O'Neill, partner of LOGIC Advisors.

Spot gold hit a record of $1,201.40 an ounce, and was at $1,195.50 an ounce at 3.38 p.m. EST, against $1,179.10 late in New York on Monday.

US February gold settled up $17.90, or 1.5 percent, at $1,200.20 an ounce on the COMEX division of NYMEX.

The dollar fell against a basket of six other currencies yesterday as waning worries about Dubai's debt, Australia's interest rate hike, and upbeat euro zone data dimmed the greenback's safe-haven appeal.

Weakness in the US unit boosts gold's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.

Ole Hansen, senior manager at Saxo Bank, said investors had been encouraged by the strength of gold's recovery after it fell below $1,140 an ounce last week, with the fall being met with strong fund buying.