Gold has touched a fresh record high of $1,007.10 an ounce as deepening financial market troubles increase its appeal as a haven investment.
Analysts said gold prices could rise still further
The latest increase in the price of the precious metal came after the news that US investment bank Bear Stearns has been forced to seek emergency funding.
The announcement has raised fears that other US banks may have to follow suit.
After touching $1,007.10, gold had fallen back slightly to $1,000.40 by late afternoon in Europe.
'Fuel to fire'
"This whole fear of the credit crisis being far from over seems to escalate on a daily basis," said Daniel Hynes, metals analyst at Merrill Lynch.
"That has been a key driver of gold over the last couple of months. So this announcement just adds fuel to that fire."
The weak value of the dollar is another factor behind high gold prices, as investors seek a better store of value.
Analysts say that the dollar could fall further over the next few weeks.