Spot gold hits $655 in New York
Gold hit $655 per ounce shortly after the New York open today, recovering levels seen a month ago on the way up to last week's top at $689.
Once it had broken above $652.50 early in Asia today, spot gold stayed above that level right through the first half of European trade.
For Sterling investors, gold touched £339 per ounce just after the Bank of England announced no change in UK interest rates at 12:00 GMT.
At the same time gold briefly broke above €497.50 for German and French buyers, dipping only slightly when the European Central Bank (ECB) then raised Euro interest rates to just 3.75% as expected.
The ECB's rate hikes so far have failed to slow the roaring Eurozone money supply, now growing at its fastest clip in 17 years.
But if central banks won't defend investors against inflation, then investors will buy gold to defend themselves. (Read more about the history of gold and inflation here...)
"We still believe that fundamentals for the gold market are as strong now as they were three or four weeks ago," says Michael Widmer at Calyon Bank.
"It was perception of risk that had changed. People were moving out of various markets, wanting to reduce the volatility."
In the equity markets, Japanese and European stocks have risen so far today. US stock futures pointed up just ahead of the Wall Street open.
"Part of the rebound that is coming through at the moment is because people are getting back into the market," says Widmer. "They are still bullish."
But just what's bullish for gold right now? "Gold is coming into its own," says one London analyst.
"You have a growing middle class in China who are seeing the benefits of investing in gold. And the fundamentals of the Dollar are not good." (Click here to learn more about how emerging Asian demand has underpinned the bull market in gold to date...)
In the gold futures market, the price of gold for August delivery rose to $667 per ounce today, still 5% off the top of early last week but up more than $4 for the session.
In Frankfurt, meantime, the ECB yesterday reported that one central bank party to the Central Bank Gold Agreement sold some 2.1 tonnes last week.
"At the current rate of sales," notes Jon Nones at ResourceInvestor.com, "about 22 tonnes per month, central banks are on pace to end the [fiscal] year around 230 tonnes short of their 500-tonne quota."
"They would have to sell about 55 tonnes per month here on out to make up the difference."
You can read more about the sudden switch in central bank attitudes towards gold by clicking here now...