The price of gold rose to an all-time high of $1,589.56 an ounce in early trading today, before falling to $1,584.51.
The dollar also fell against the Japanese yen and a weakening US dollar typically results in a rise in the price of gold as the currency generally moves in the opposite direction to the precious metal.
Some believe gold will continue its rally to above $1,600 an ounce later this year, while other optimistic investors see it reaching as high as $1,700 an ounce by December.
The surge in the price of gold has been linked to ratings agency Moody’s reviewing the US’s AAA debt rating, warning there was a growing likelihood the US will default on its debt obligations.
Chairman of the Federal Reserve, Ben Bernanke, has warned that the US defaulting on its debt would cause a “major crisis”.
