Physical gold for immediate delivery recorded its highest London Fix since May 18th 2006 on Tuesday at $688 per ounce.

In the spot gold market, prices broke back above $690 after hitting an 11-month high late in New York on Monday.

"Fresh funds are flowing into gold," reckoned one Tokyo trader at Mitsubishi.

"Buying by Asian end-users also shows the market's fundamentals are healthy."

Demand from Indian jewelry buyers is set to rise strongly this month, driving physical sales higher in the spot market according to one industry report, as the wedding season coincides with a key festival in the southern states (click here to learn more...).

Tuesday morning also brought news that US inflation rose 0.6% in March – in line with expectations – while "core" inflation excluding food and fuel slipped to 0.1%.

Putting the absurdities of an inflation index that ignores the cost of eating, heating and travel to one side, this news diminishes the threat of higher US interest rates ahead – and that's typically been a bullish sign for gold during this bull market.

(For more on the more on the absurdities of today's US inflation data, click here...)

Meantime in London, the UK government announced that inflation in the cost of living rose to a fresh 16-year peak last month.

That drove Sterling up through the $2.00 mark for the first time since 1992, pushing the Sterling price of gold down to a 3-day low of £343.50 by the US opening.

You can get the full story on today's UK inflation numbers here...