LONDON – The price of gold hit a record high above $1,450 an ounce in trading here Tuesday as the 'safe haven' metal won support from geopolitical unrest and surging global inflation, traders said.
Gold reached $1,450.65 an ounce at 1515 GMT on the London Bullion Market, beating the previous record of $1,447.82 set on March 24.
It stood at $1,448.65 an ounce at about 1630 GMT, while sister metal silver struck a 31-year peak of $39.09 an ounce in the wake of gold's rally.
Precious metals have been winning support as unrest in the Middle East and north Africa "shows no signs of abating with the civil war in Libya escalating and already negative situations in... Syria, Yemen and Bahrain deteriorating further," said SEB Commodity Research analyst Bjarne Schieldrop.
"Increasing global inflation pressures provide additional support for gold."
Brent crude oil futures surged to 2.5-year highs above $122 a barrel in London trade on Tuesday, sparking concerns that global inflation could continue to rise.
"Very high inflation rates are particularly good for gold for short periods, as investors seek out hard assets, as concerns about the outlook intensify and safe-haven buying picks up," Standard Chartered analysts said in a research note.
China, a major consumer of commodities such as oil and metals, said Tuesday it would raise one-year deposit and lending rates by 25 basis points in its latest effort to curb rampant lending and bring inflation under control.
The People's Bank of China said the interest rate hikes -- the fourth since late last year -- would take effect Wednesday.
Authorities have been pulling on a variety of policy levers to rein in consumer prices and housing costs but inflation remains stubbornly high.
The country's consumer price index rose to 4.9 percent in February, well above the government's full-year target of four percent, despite persistent efforts to reduce household costs and ease growing consumer anxiety.
Analysts at Barclays Capital noted that "investors continue to exhibit symptoms of flight to safety."
They added: "Gold and silver gained as oil prices forged ahead with its upward trajectory while ongoing geopolitical concerns and European sovereign debt issues remained in the background."