Spot gold in London surged to above US$1,230 a troy ounce, surpassing the previous record set in December last year.

Gold prices in euro terms also hit a fresh all-time high of €969 an ounce in late trading in London on May 11, up almost 26 per cent since the beginning of the year.

Traders and coin dealers said buying was exceptionally strong from German and Swiss investors. In Frankfurt, gold sellers said that demand late last week was three to four times normal levels. The spike appears to reflect concerns in Germany about the potential inflationary impact of the European Central Bank's decision to buy up eurozone government bonds in the wake of the Greek debt crisis.

Global investors have been increasingly turning to gold since 2008. Gold traditionally performs well during times of financial distress or in times of US dollar weakness.

Global investors, led by the US, last year bought a record 228.5 tonnes of gold in the form of bullion coins, up from 77.4 tonnes in 2000, according to GFMS, the London-based precious metals consultancy.