Spot gold rose as high as $1,126.85 an ounce, its highest level since 20 January.
This news came as the World Gold Council (WGC) said global annual demand for gold was down 11 per cent in 2009 from the year before, but investors’ faith in bullion is strengthening, according to the body’s annual Global Demands Trend report.
Despite the dip, total demand for gold closed above the $100bn mark for the second year in a row, the report said.
Returns from bullion gained 35 per cent last year, its biggest annual gain in three decades.
Commodities in general and gold in particular are benefiting from fresh investment. Billionaire investor George Soros’s hedge fund more than doubled its bet on the price of gold during the fourth quarter, an SEC filing showed earlier this week.
Pension funds also started investing actively in gold last year viewing the metal as a safe long-term investment, the WGC said.
“Investment demand from the United States and a lack of selling out of Asia are pushing gold up,” said Standard Bank analyst Walter de Wet, adding that a fall in net long positions in New York gold futures suggested gold had room to rise.
The WGC headline annual figures, mask the turbulence in the gold market. Jewellery demand for instance rose 49 per cent between the first and last quarters of 2009, while industrial demand too benefited from improving economic conditions late in the year.
WGC chief executive Aram Shishmanian said: “2009 was a year which provides a clear illustration of the diversity inherent in the global gold market.”