LONDON, Jan 30: Gold rallied more than 2 per cent in Europe on Friday to a three-month high, as investors once again sought the safety of bullion from volatility in other assets.

Spot gold climbed to a high of $926.10 an ounce, and was quoted at $918.50/920.50 an ounce up from $906.75 in New York late on Thursday. Gold priced in euros hit a record high of 720.53 euros.

Gold has risen around 3 percent this week as investors have scrambled for the safety of gold and bullion-backed assets such as exchange-traded funds.

The world’s biggest gold-backed ETF, New York’s SPDR Gold Trust, said its holdings jumped more than 10 tonnes on Thursday to a record 843.59 tonnes.

ETFs, which issue exchange-traded securities backed by physical gold, have proved a popular alterative to investment products such as bullion bars and coins.

SPDR’s holdings have risen more than 63 tons or 8 per cent since Dec 31.

Although gold usually moves in the opposite direction to the dollar, the negative correlation between the two has broken down in recent weeks as both assets gained on risk aversion.

Gold prices have benefited from a renewed surge of inflows into gold ETFs, Deutsche Bank said.

We believe this has enabled the gold price to trade at relatively rich levels when compared to EUR/USD.

But jewellery demand remains hamstrung by high prices.

In India, the world’s biggest bullion market, gold futures touched an all-time high of 14,407 rupees per 10 grams, deterring buyers from purchases.

Scrap sales are booming, however, as consumers cash in on the price rise.

Silver prices tracked gold higher, rising to a peak of $12.57 an ounce, their highest since Oct 1. It was later quoted at $12.46/12.53 an ounce against $12.31.

Silver ETFs have also risen sharply this year, with the largest, the iShares Silver Trust, up 660 tonnes or 10 per cent in the year to date.—Reuters