Gold surged more US$40 to its highest for a year as investors fled stock markets and sought refuge elsewhere.
The recent rally by the precious metal has caught many commentators completely by surprise.
Renewed inflows into exchange traded funds are one reason gold has headed north so rapidly.
As much gold has flowed into the ETFs in the first eight days of February as did in the in the whole of January, said Commerzbank.
Fed chair Janet Yellen’s comments to the US Senate last night that it may postpone further interest rate hikes if the turmoil on the global financial markets were to continue fuelled the trend today.
Her comments sent the dollar tumbling to its lowest since 2014 against the yen. Gold and the US currency traditionally move in opposite directions.
Latest data from the World Gold Council showed demand was also rising towards the end of 2015.
Fourth quarter demand grew by 4% year-on-year to 1,117.7 tons, a two-year high. Over the year, gold demand totalled 4,212 tons,a fourth year of decline, but the pick up in the final quarter clawed back some of weakness seen earlier.
Jewellery had a big six months, with sales the most for more than a decade. China retained the number one market spot with 984.5 tons. India was second with 848.9 tons.
The World Gold Council believes that the demand outlook for both countries is better this year than last.
Total supply also fell by 4% to 4,258t or the lowest since 2009, said the WGC, as mine output growth slowed to 1% and recycling hit its lowest for years.
Two hours into US trading, spot gold has added US$45 or almost 4% at US$1242. Silver jumped US$0.41 to US$15.67 while platinum climbed US$23 to US$955.
Major share moves
Randgold Resources up 360p to 6,061p
Fresnillo up 45p to 875p
Anglo American down 8p to 320p