Gold soared to a fresh record high as its safe-haven appeal, a weaker dollar and growing central bank appetite propelled it ahead.
The precious metal rose nearly 2% to hit $1,274.75 an ounce over Tuesday night - its biggest one-day gain in four months.
It has increased over 16% in the year-to-date and is set for its tenth annual gain as continuing worries for the state of the global economy has boosted its allure.
Metals consultancy GFMS said the continued monetary and fiscal policies of the world's governments, coupled with fears of a double-dip recession, have highlighted gold's safe-haven quality and curbed interest in equities and more conventional sectors.
Philip Klapwijk, chairman of GFMS, added that so far the US had side-stepped the sovereign debt crisis that has plagued Europe but the possibility of this occurring in the future has only served to add to the commodity's appeal.
Central banks also appear to be getting in on the act. Analysts at BNP Paribas say: 'Gold prices have pushed to a fresh record amid forecasts that central banks will be net buyers of bullion this year for the first time in two decades.'
GFMS estimates that central banks will snap up around 15 tonnes of bullion this year - an occurrence not seen in over 20 years.
The Central Bank of Bangladesh bought ten tonnes of gold last week and analysts are forecasting similar moves from a number of other Asian central banks on the belief that gold prices will be supported over the mid-term.
John Meyer, metals analyst at Fairfax, comments: "The withdrawal of substantial central bank gold sales appears to be having a marked impact on gold prices. It is not possible for gold producers to raise production to meet such a shortfall in metal available to the market."
Their appetite for the metal came amid crushing currency volatility which saw the dollar plunge to a 15-year low against the yen and a nine-month low against the Swiss franc earlier this week.
Commodity analysts at Commerzbank comments: "The price rally has not only reduced the risk of profit-taking by speculative financial investors but also means that more investors could now jump on the bandwagon and keep the rally going."
On the physical market, demand for gold jewellery ahead of the Hindu religious festivals season has also helped to boost prices.
David Wilson, analyst at Societe Generale, comments: "The importance of China and India to the gold market is well documented but for the benefit of the record, the latest quarterly trend figures show that these two countries accounted for over 40% of jewellery and investment bar demand in the second quarter of 2010."
Wilson adds that underlying interest remains strong and should see the physical markets strengthen all round, suggesting that now is the time to be looking at gold exposure.
As well as growing physical demand, gold prices are still receiving support from the supply side. Russia's gold mining output was 5.9% lower at 83.9 tonnes in the first seven months of the year than for the same period last year.
John Meyer concludes: "Gold prices appear to have broken through some important technical resistance levels and look poised to break through $1,300 relatively quickly. The price rise should take out any short sellers in the market.
"A spike over $1,500 an ounce may be needed to loosen sufficient gold to return the market towards balance by the end of this year."