Gold soared to a near record high on 8 September, amid mounting concern that the global economic recovery is stalling.

The precious metal traded as high as $1,262 an ounce - its highest level since 28 June and just a stone's throw from the $1,265 intraday record high achieved in June.

Commodity analysts at Commerzbank say it is 'probably only a matter of time before this hurdle is taken and gold reaches new record highs'.

Today's bullish streak comes hot on the heels of gold's record high settlement price of $1,259.30 an ounce on Tuesday evening after adding over $8.

The precious metal's reputation as a safe haven gained impetus this week as fears over the state of the European banking sector and its exposure to sovereign debt, coupled with lower equities markets, fuelled investor interest.

Suki Cooper, analyst at Barclays, says physical demand has stepped onto the sidelines, 'with the baton being passed to investment demand' to drive gold prices higher.

The yellow metal rallied on Tuesday and Wednesday as investors chose to place their money into gold instead of equities and currencies as doubt was cast over the trustworthiness of the recent European bank stress tests.

Furthermore, the yen soared to a 15-year high against the dollar as speculation grew that the Federal Reserve's 'Beige Book' would reveal a slowdown in the US economic recovery.

Analysts at Goldman Sachs say the 'macro context for gold is shifting favourably', citing renewed fears of slower global growth and continuing loose US monetary policy.

Meanwhile, physical gold exchange traded product holdings have set a new peak over 2,100 tonnes - surpassing the high set in mid July.

Bullion has increased 15 per cent so far this year and is on track for its tenth annual gain as its appeal continued to widen in the wake of the recession.

Looking ahead, John Meyer, analyst at Fairfax, comments: 'As the economic outlook continues to be volatile, gold will remain a very attractive investment.'

Societe Generale is predicting prices as sharp as $1,350 an ounce in the final quarter of this year, before climbing to $1,400 an ounce in the first three months of 2011 as dynamics continue to support its growth.

In addition to economic unease fuelling investor appetite, the group's commodity analysts believe physical demand will also underpin high prices and say US Labour Day - which occurred earlier this week - has been traditionally regarded by some as the date after which the world's Western industrial markets step up a gear, especially with regards to gold.

Furthermore, Societe Generale stresses the importance of China and India, given that the latest data from the World Gold Council revealed that together they accounted for more than 40 per cent of jewellery and investment bar demand in the second quarter of 2010.

Precious metals analyst David Wilson says: 'Underlying interest is strong and so the next few weeks should see the physical market strengthen all round, suggesting that, all other things being equal, now is the time to be looking at gold exposure.'

Barclays Capital agrees that jewellery demand in India will continue to gather momentum despite the record high prices.

'We continue to expect physical demand to provide an increasingly solid floor for gold prices to build gains upon,' Cooper comments.