The gold spot price hit a record high of US$1247.70 per ounce overnight as concerns over the European bailout package continued to gather steam.
The price of gold has risen over the US$1200 per ounce mark in recent weeks, driven upwards by the sovereign debt issues of several European economies, particularly Greece, Spain and Portugal.
The Eurozone nations late last week injected a €440 bailout package to prevent these countries from defaulting on their debts.
The package, totalling €750 billion (A$1.07 trillion), also included €60 billion from a European Union emergency fund and a €250 loan from the International Monetary fund.
These funds initially allied some fears and sparked rises in markets across Europe.
However, there is now growing doubt that the package will be enough to keep the debt crisis from crippling the continent.
Subsequently, gold has once again become a safer bet for traders.
The market reacted in a similar way to the diminishing US dollar late last year, causing the gold price to break through the US$1200 mark for the first time in history.
There were suggestions that gold could replace the US dollar as the world’s principle reserve currency, especially after emerging economies like India and China began stocking up bullions.
However, the dollar stabilised and gold prices receded back below US$1200 per ounce.
Thanks to the enormous size of bailout, many investors are also turning to the commodity as a hedge against inflation.
The gold price had settled to US$1240 per ounce by the close of trading.