Gold prices have hit record highs this week. Gold broke a 28 year record last week on January 3, eclipsing the January 21, 1980 record price of $US850 an ounce, and the march towards $900 has continued.

The spot gold price hit an all-time high of $895.50/oz on Thursday, January 10. Comments from US Federal Reserve Chairman Ben Bernanke, saying more interest rate cuts may be required in the US are credited with triggering the run on gold.

Bernanke’s comments and recent US manufacturing and employment figures are seen to be in step with predictions that the US Federal Reserve is likely to cut interest rates by half a per cent later this month.

Spot gold prices have increased by over seven per cent since the start of the New Year and over 40 per cent since the beginning of 2007.

On the COMEX Division of the New York Mercantile Exchange, February gold ended at $893.60 an ounce overnight. Before trade closed, February gold peaked at a high of $897.30.

Fears of rising inflation, exacerbated by rising oil prices, have led to investors seeking refuge in gold.

The Australian dollar has also rallied following the US Federal Reserve chairman’s comments, going as high as $US0.8976 on Thursday. This is the first time the Aussie dollar has been above 89 cents since November 19 last year.

At midday Sydney time on January 11, gold was trading at $891 an ounce, silver $16.12, platinum $1552 and palladium $375 an ounce.