Gold has broken the 1,500 dollars-an-ounce barrier for the first time as fears over the global economy send investors flocking to safer investments.
The precious metal has hit a fresh all-time high in the wake of Monday's shock debt downgrade warning for America, which also resulted in silver prices reaching a 31-year record.
Standard & Poor's (S&P) sparked hefty share falls earlier this week when it slashed its outlook on US government debt to negative from stable.
The move added to continuing concerns over Europe's sovereign debt crisis and rising global inflation, which has seen a flight to safety among investors.
The US dollar has also been under pressure since the S&P blow, further fuelling the rise in gold prices.
The record gold price helped mining stocks leap ahead on the London market, with shares in firms such as Rio Tinto and Anglo American as much as 3pc higher.
The traditional safe haven has soared in value in recent years as investors have been spooked by economic uncertainty.
Gold eased back at the start of the year after a run of positive economic data, but has since bounced back due to gloomy global developments.
The US debt outlook downgrade compounded concerns following political tensions in the Middle East and North Africa, Japan's crisis and more eurozone woes.
Ireland's rating was slashed to just above junk status last week by Moody's, while Portugal is edging closer to a bailout.
S&P said on making its debt warning that there was a "material risk that US policymakers might not reach an agreement on how to address medium and long-term budgetary challenges by 2013".
US Treasury Secretary Tim Geithner was quick to play down the caution, saying the US would keep its triple A rating.
However, some experts believe that with the world's biggest economy under pressure to cut its debt, the gold rally could see prices hit 2,000 dollars an ounce.