Gold hits record high

Investors pushed the price of gold to more than $1,270 US an ounce Tuesday, the highest point on record for the precious metal, and gold bugs were calling for it to top $1,300 in the not-too-distant future.

TSX closes up 43 points

Investors pushed the price of gold to its highest point on record and gold bugs were calling for the yellow metal to top $1,300 US an ounce in the not-too-distant future.

Spot prices for gold hit a record high of $1,276.50 US an ounce Tuesday. ((Nick Ut/Associated Press))

On the New York Mercantile Exchange, the December gold futures contract touched $1,276.50 US an ounce, before scaling back to $1,271.70.

The safe-haven investment gained ground after fresh data from Europe pointed to a lethargic global economy.

Eurostat, the EU's statistics office, said industrial production in the eurozone was flat in July, against expectations for a modest increase, and a survey of German investor sentiment was much weaker than expected.

Beyond individual investors, central banks have also begun to stockpile gold to pad their reserves and as a hedge against the declining value of the U.S. dollar.

Just last week, the government of Bangladesh bought 10 tons of gold for roughly $400 million US from the International Monetary Fund.

"All that was accomplished in Europe is that a trillion dollars later, we still have the same problems and the gold market is asking who is going to pay for it," said John Ing, president of Toronto-based investment research house Maison Placements Inc.

Years of cheap credit are fueling inflationary fears, and gold does well in that environment, said Ing, who predicts spot prices will head towards $1,350 an ounce in the near term.

Gold stocks jumped on the S&P/TSX composite index in Toronto. Shares of Barrick Gold Corp., one of the biggest producers in the world, gained $1.02, or 2.3 per cent, to $46.42 after touching a high of $47 earlier in the day.

Rival Goldcorp Inc. gained $1.50, or 3.5 per cent, to close at $44.10 after touching $44.82 earlier in the session.

Gold's strong performance helped push the benchmark S&P/TSX index up 43.12 points, or 0.4 per cent, to 12,192.98.

Meanwhile, the Dow Jones industrial average lost 17.64 points to close at 10,526.49 after a boost from news that U.S. retail sales rose 0.4 per cent last month, the best advance since March. Economists had expected a slightly smaller increase of 0.3 per cent.

The Canadian dollar was at 97.3 cents US, down 0.04 of a cent.