The price of gold today surged to an historic high, breaking through the $900 barrier to reach $914 an ounce.

The weakness of the dollar and the expectation of a sharp cut in US interest rates were behind the rush on the precious metal, analysts said.

Global economic uncertainty traditionally prompts investors to seek refuge in bullion, and the cheap dollar has made gold, which is traded in the US currency, more alluring to foreign investors.

Gold prices reached $914 per ounce in London this morning, up 50 per cent over the past year and 15 per cent in the past month.

The surge also prompted buyers to snap up other precious metals, with silver prices reaching a 27-year peak, platinum hitting a record, and palladium reaching a two-month high.

Analysts warned that the furious rise in the price of gold left the metal prone to sharp corrections.

Robin Bhar, metals analyst at UBS Investment Bank, said: “It’s human nature to buy into a market that is already showing strength. Most fund managers have a herd mentality and they are just attracted to gains. Gold could go higher still, but we don’t think this is a right time for buying.

“From a technical perspective, we would obviously need to see a close above $900 that would be construed as a bullish sign. But fundamentally, we are very cautious and would not advocate going long here because positioning is still extreme. There is a risk of $50-$100 correction at any time,” he said.

In London the price of spot gold was quoted at $9112.50 - $912.30 by 1130 GMT, compared with $895.70 - $896.50 in New York on Friday.

US gold futures reached $915.90 an ounce, surpassing Friday’s record of $900.10. The most active February contract was later quoted at $913.30, up $15.6 an ounce.

Darren Heathcote, of Investec Australia, said:”We are in an uncharted territory, really. We have a weaker dollar and that’s encouraged people to buy gold.”

The rising prices have already shown signs of filtering through to consumers, with high street jewellers H Samuel and Signet, owner of the Ernest Jones chain, reporting “substantial” increases in gold, platinum and diamond costs.

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