Gold is providing a safe-haven for investors as they are buying record amount of gold bars and coins, shunning risky assets for the relatively safety of bullion amid renewed fears about global financial crisis.

Purchases of physical gold have jumped over the past six months as the US mint sold 92,000 ounces of its popular American eagle coins last month, almost four times that which it sold a year ago and more than it shipped during the whole of the first half of 2007.

“Large purchases of coins are perhaps the ultimate sign of safe-haven gold buying,” said John Reade, a precious metal strategist at UBS. Inflows into gold-backed exchange traded funds surge in January pushing bullion holdings to an all-time high of 1,317 tonnes.

UBS and Goldman Sachs said last week that investor hoarding would drive prices back above $1000 an ounce as they estimate that investment demand into gold could double in 2009 compared to 2007. Currently, gold is trading at $894.25 an ounce or $31,388.17 per kilogram.

However, Jewellery demand, historically the backbone of gold consumption had collapsed under the weight of the high prices with key markets of India, turkey and the Middle East have capped the potential of any price rally.