An ounce of gold now costs an all time high of $1,043.77 after a dip in the dollar boosted the attractiveness of metals to investors.
Fears of higher inflation in the US as the country's economy picks up has contributed to the drop in the price of the dollar, adding to the appeal of gold.
The last time the spot price of gold hit a new high was in March 2008, when it reached $1,032.80 an ounce.
The price of gold has the potential to rise still further towards the last quarter of 2009 if the dollar remains weak, say analysts. October to December is usually a strong period for the price of gold anyway, linked to an increase in demand for jewellery in the run-up to the holiday season.
"We believe it should continue to perform well against most assets into the final quarter of 2009," says Daniel Sacks, co-portfolio manager of the Investec Global Gold fund.
"Moreover, the price of gold is still just over half of its prior peak in ‘real' terms, even after the rally of the past eight years."
Sacks says with continued uncertainty as to how "real" the perceived recovery is, gold remains a sturdy option.
"In almost all but a global soft-landing scenario, gold is likely to rally further. With a global recovery unlikely to be smooth, the two main risks to most asset values are inflation and US dollar weakness- both of which are decisively gold positive."
Sacks adds gold is the only commodity whose production is going down, not up, with little chance of a supply response to high gold prices as mine production is on a declining trend.
Copper prices also rose above $6,000 a tonne, as the weaker dollar made metals cheaper for non-US investors.
The rise in metal prices then lifted shares in mining firms which were among the biggest risers on the FTSE 100 today, with Fresnillo adding 10% and both Kazakhmys and Vedanta up 9%.
