Gold tops $1,500 an ounce for new record

Gold yesterday rose above $1,500 an ounce for the first time as fears over the strength of the global recovery and rising inflation sent investors flocking to safer investments.

Silver tracked gold higher, extending a stellar performance that has seen the grey metal outperform other precious metals this year.

Gold prices are up by some 5 per cent in April and look set to extend gains as the metal's appeal as a haven from risk was boosted by talk that Greece may have to restructure its debt and Standard & Poor's threat to downgrade America's triple-A credit rating.

The dollar has also been under pressure since the S&P blow, further fuelling the rise in gold prices.

Despite that, stock markets also gained yesterday, with London's benchmark FTSE 100 index closing up 2.1 per cent after better-than-expected US corporate earnings.

Gold eased back at the start of the year after a run of positive economic data, but has since bounced back due to gloomy global developments.

The US debt outlook downgrade compounded concerns following political tensions in the Middle East and North Africa, Japan's crisis and more eurozone woes.

Some experts believe that with the world's biggest economy under pressure to cut its debt, the gold rally could see prices hit $2,000 an ounce.

Simon Weeks, head of precious metals at the Bank of Nova Scotia, said: "Gold has been acting as a currency in its own right, and that is why we are up at $1,500.

"There is an awful lot of bad news in the price. The S&P comment the other day has given us the final kicker to get up here."