The spot price of gold has hit an all-time peak of over 876 dollars an ounce in London. Traders said that was due to rebounding oil prices, a weak dollar and geopolitical tensions.
Investors tend to buy the metal as a defence against inflation, which is being fuelled by the high cost of crude. The price of gold rose 31% last year and since 2000 it has risen by 212% from the then price of 280 dollars an ounce.
Investors are also turning to the precious metal as an alternative to poorly performing shares and as a safe haven amid global uncertainty. A new price peak was reached last week in reaction to unrest in Pakistan, the faltering dollar and oil going above one hundred dollars a barrel.
Another factor is reduced production. World output is near a 10-year low and mining companies are having to dig deeper.
However, adjusted for inflation, gold remains well below its all-time high. In 1980 oil prices shot up during the Iranian revolution and gold went above 850 dollars an ounce – the equivalent of 2,200 dollars an ounce today.