Gold enjoyed a remarkably quiet session in Asia and Europe today after gaining more than $23 to close New York at a 9-month high of $678.50 last night.

Ranging barely 0.3% either side, gold traded just shy of €519 per ounce as dealers in Frankfurt grabbed their lunch. It held onto the 6-month highs hit versus Sterling too, beginning the afternoon in London worth more than £349 per ounce.

"The market is very bullish and $700 an ounce is clearly in focus," said Tatsuo Kageyama, an analyst at Kanetsu Asset Management, to Reuters earlier.

Gold futures for Dec. delivery reached the equivalent of $683 in Tokyo today. And with the Yen continuing to weaken despite the Bank of Japan raising interest rates to 0.5%, gold's not the only asset enjoying a bull run in Tokyo right now.

The Nikkei just broke above 18,000 for the first time in nearly 7 years.

"The fact that we could confirm interest rate increases will not be consecutive eased concern over the currency trend," said Masayuki Kubota, a fund manager at Daiwa who oversees $2.1 billion in assets.

"[That] pushed exporter stocks higher."

Wednesday's hike in Yen interest rates did nothing to quell fears about the global "Yen carry trade" either. Today's Telegraph in London reports that net short positions in the Japanese currency have reached a record $23 billion.

"A growing chorus of officials have warned that carry trade excesses could end in a replay of the 1998 crisis, when the Yen suddenly snapped back violently by 12% in 72 hours – leaving hedge funds nursing huge losses." (Learn more about the risks here...)

Little sign of fear in New York, London or Frankfurt, however. While the Dow slipped on Wednesday, it dropped less than 0.4% from the new all-time high hit on Tuesday.

Europe has opened strongly today, pushing the FTSE Eurofirst 300 index up nearly 0.6% as results from Nestle, Axa and BASF beat forecasts.

As for yesterday's huge 3.5% rise in the gold price, it was also driven by the surge of liquidity in today's financial markets – rather than the recovery in oil prices to $60 as reported by the newswires today.

Without doubt, the real driver on Wednesday was the US inflation data released just before the US open.

Core CPI inflation rose 0.3% in Jan., said the Labor Department. Wall Street had been expecting less than half that.

Given that most analysts have been discussing when the Fed will cut Dollar interest rates, the shock of yesterday's data sent money pouring into gold.

"The Fed is going to stay the course," reckons Richard Berner, chief US economist at Morgan Stanley in New York. "Data on inflation remind us that the Fed has little incentive to ease monetary policy."

Berner sees no change in Fed rates before next year. But with CPI rising while the Fed sticks at 5.25%, real rates in the US are falling.

That doesn't bode well for America's famously negative savings rate right now. History says it will continue to push more money into gold.

Click here to find out why...