Gold has broken through the $1,100 barrier for the first time, as central banks around the world turned to its relative safety.

The metal became the investment of choice as concern mounted about the global economy after a rise in the unemployment rate in the United States to above 10 per cent in October.

Gold had been boosted earlier in the week when the Indian and Sri Lankan central banks bought the metal, with the Reserve Bank of India snapping up 200 tonnes of gold from the International Monetary Fund on Monday.

Rumours that the Chinese central bank is going to start buying gold have also helped to buoy the price.

David Wilson, director of metal res-earch at Société Générale, said: “There’s a lot of positive sentiment and it’s definitely getting a leg up from that. It’s also being driven by fears about higher inflation going forward.

“There’s concerns about the dollar and a lot of bigger commodity hedge funds are being more positive on gold.”

Aram Shishmanian, chief executive of the World Gold Council, said: “Many central banks are reassessing their reserve asset management policies, both in traditional ‘over-weighted’ countries, as well as the key Asian central banks.”

The price of raw sugar also rallied to a 28½-year high of more than 24 cents per pound amid fears about the supply for next year. If the price continues to rise, it could affect world food prices.

After a period of over-supply, India, the world’s largest sugar supplier, has moved from exporting five million tonnes more sugar than it imported to importing four million tonnes more than it exports this year.

After a large crop in 2006-07, the country started to export excess sugar. Because of the extent of the supply, the price that Indian farmers received was much lower than expected, and about 20 per cent of them switched to farming other crops.

The harvest in Brazil, which grows about 70 per cent of the world’s sugar cane, has been worse than expected this year. As its farmers agree to sell sugar in advance, they will not have benefited from the present high prices. It is feared that they will not be able to reinvest enough to cope with growing demand.

Dealers were keeping a close eye on more favourable weather patterns in Brazil after heavy and persistent rains delayed the harvest. They were also tracking the outlook for Indian buying in 2009-10, with several anticipating an import requirement of up to seven million tonnes to underpin prices.

Tate & Lyle, the sugar and food processing group, said that its first-half performance had been better than expected after sales to food and drink customers held firm. The sugar and ingredients business reported a 7 per cent rise in half-year revenues to £1.82 billion, while adjusted operating profits fell 11 per cent to £148 million.

Tate said that it had traded slightly ahead of expectations in the first half, despite challenging conditions in some of its markets, including industrial starch, US ethanol and US animal feeds, which remain under pressure.

Including exceptional costs of £55 million relating to the mothballing of a sucralose plant in Alabama, pre-tax profits fell by 59 per cent to £50 million.

The steady performance came after last year’s run of profit warnings, caused by the weak dollar, lower sugar prices after European Union reforms and higher European corn costs.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive