The price of gold in euros rose to the highest since June on Wednesday as concerns that the eurozone sovereign debt crisis would spread swept across financial markets.
The yellow metal was also buoyed by escalating tensions on the Korean peninsula as Russia warned of “colossal danger” after North Korea launched an artillery barrage against a South Korean island.
Euro-denominated gold rose 0.8 per cent to €1,037.92 a troy ounce, a level above which it has only traded on three days in June when in it reached a record €1,050.
In dollar terms, gold ticked up to $1,377.20 an ounce. It has risen 3.1 per cent in the past week.
Coin dealers in Europe reported strong demand for gold coins and bars. Sonia Hellwig, director of CoinInvestDirect, said sales of gold and silver coins had risen about 30 per cent from the rate in November.
Michael Berger, sales director of Oro Direct, a coin and bar dealer based in Valencia, said Spanish demand for gold had risen sharply. “People really are scared,” Mr Berger said. “They don’t know what is going to happen – with the banks, with their money, with their pensions. There is a lot of uncertainty.”
James Steel, precious metals analyst at HSBC in New York, said it was difficult to envisage the sovereign debt concerns abating in the near term.
“If the EU authorities cannot construct an effective firewall between Ireland and the other peripheral EU nations then sovereign stresses will not persist but could spread to the benefit of gold,” Mr Steel said.
In other markets, agricultural commodities and metals enjoyed a small bounce. ICE March raw sugar rose 1.1 per cent to 27.63 cents a pound; CBOT December corn rose 0.85 per cent to $5.33 a bushel; and copper for delivery in three months was 0.9 per cent higher at $8,224 a tonne.
Nymex January West Texas Intermediate crude oil was 53 cents stronger at $81.78 a barrel.
