Price of gold hits record high

Gold hit US$1,217.23 on the London Bullion Market one day after breaking through the US$1,200 barrier for the first time.

After reaching a new high on Wednesday, gold pulled back slightly to trade at US$1,214.30 at about 0855 GMT.

Gold has smashed record after record over recent days and weeks on the back of inflationary fears and increasing moves by central banks to diversify assets away from the dollar, which has weakened against the European single currency.

A falling greenback makes dollar-denominated gold cheaper for buyers holding stronger currencies, pushing up demand for the metal and eventually its price.

In European foreign exchange trading on Wednesday, the euro rose to above US$1.51.

The yellow metal, whose two main drivers are jewellery and investment buyers, has also won favour in the uncertain economic climate which has been fuelled by Dubai's debt crisis. Gold is traditionally viewed as a safe-haven investment.

After surging above US$1,200, the market is staring "into the unknown," said VTB Capital commodities analyst Andrey Kryuchenkov.

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