The price of gold exceeded $900 a troy ounce, for the first time in more than three months, after strong buying figures as spooked investors turn to what's traditionally seen as safe haven from turmoil in the financial markets.
The demand for relative security from the global economic slowdown and stock market volatility is thought to have pushed gold prices
up to record new highs in terms of the euro and sterling.
Traders have reported this week that investors have been pouring money into gold exchange-traded funds, the Financial Times reports, which is a popular way of investing in gold, as well as reporting strong purchasing levels of physical gold in the form of gold coins and bars.
Gold is the "obvious shelter" for safe haven investors, Edel Tully, of Mitsui & Co Precious Metals told the Financial Times, "gold is one of the limited assets that investors want exposure to during these frantic times."
Tanaka Kikinzoku Kogyo, Japan's biggest bullion house, reported that gold coin sales grew by 121 per cent last year as conditions in the economy worsened and other markets suffered.
In terms of the euro and stirling, gold reached an all time high of 701.55 and 661.55 an ounce respectively, pushed up by fears over the falling price of other assets.
"Gold is rising on the fallout from the renewed banking crisis," VM Group analyst Matthew Turner told The Guardian.
"The banking crisis is bad for share prices and creates fear and panic. Some investors are thinking gold is the safest option."
Some analysts predict that as investors seek to protect themselves from the credit crunch, gold could reach as high as $2,000 an ounce.
Investors are attracted to physical gold because of the intangible nature of the stock market, often preferring the supposed security of owning something physical as opposed to stocks and shares. Buying gold online
has also become increasingly popular as a faster and more convenient way of buying and selling independently.
Research from Reuters has further revealed the way that investors perceive gold as more secure than other investments, as the values of other precious metals such as platinum and silver have fallen while gold continues to rise.
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