As the stock market continues to falter, investors have turned to gold to seek refuge from ongoing financial instability, causing the precious metal to surge more than four percent to its highest level in a year on Thursday.

Gold had been on the rise in the past few months as central banks bolstered their reserves and investment demand increased. This appetite for the precious metal continued into January 2016 when concerns about the Chinese economy and plunging oil prices triggered a massive stock market sell-off.

This trend has continued, as investors have mounting fears about financial instability due to European bank shares slumping to multi-year lows, as well as concerns about its profitability in a low-growth, low-interest rate environment.

In light of these compounded fears, spot gold jumped more than four percent to $1,247.41 an ounce, its highest since Feb. 2015, while U.S. gold rose 4.2 percent to $1,245.20 an ounce.

"We have a good explanation for gold's rally; it is to do with worries about the U.S. economy and the rest of the world," Macquarie analyst Matthew Turner said, according to Fortune.

"Investors are concerned that central banks' solution (is) negative interest rates or at least not raising rates - and that is gold friendly. The key risk to gold is that the U.S. economy manages to put in a good performance, like it did last year," he added.

Gold-backed ETFs (exchange-traded funds) have recorded net inflows since the start of year, signaling a renewed interest in gold investments.

"Investors are returning to gold as a core diversifier and safe haven investment," James Butterfill, head of research at ETF Securities, said in a note, according to Reuters. "Given the increasingly challenging investment and economic environment, we expect this trend to continue."

The current environment has caused the prices of other precious metals to rise, as well.

Silver rose 2.8 percent to $15.70 an ounce, platinum rose 2.1 percent to $951.50 and palladium rose 0.6 percent to $522.72.