From BBC news wire 11/04/06Gold and metal prices race higher
Analysts are predicting that gold prices could climb even higher
Gold prices have hit 25-year highs, rising along with other precious metals as investors seek protection against rising inflation.
It touched highs of $608.40 an ounce before settling at $599.40. Silver also hit 23-year peaks while zinc and copper touched new record levels.
Gains have been driven by surging oil prices, tense US-Iran relations and growing demand from developing nations.
Gold producers have been failing to keep up with rising demand worldwide.
Supply shortages have worsened as a number of central banks are rumoured to be shifting out of their dollar holdings and into gold as the US currency has weakened.
'No let up'
Gold has already risen 16% this year, adding $100 to the price of an ounce over the past four months.
Investors have been attracted by the fact that the metal is offering better returns than either stocks or bonds, and provides protection against accelerating inflation and political instability.
Even though the US and the UK, its main ally, have denied they plan to attack Iran over the country's nuclear plans, concerns persist that relations may deteriorate and eventually lead to sanctions.
Should that happen, oil prices would rise further, most probably triggering a further gain in gold.
"With no let up in the tensions between Iran and the US, as well as speculation of central bank metal purchases and continued investor diversification towards commodities, particularly metals, further gains seem to be the only logical outcome," James Moore of TheBullion.Desk.com said.
Also on Tuesday, copper and zinc hit a record peak above $6,000 a tonne, while silver rose to a 23-year high.
It's not just investors who are benefiting, as the gains in commodity prices are helping lift earnings in producer nations. Indian mining company Vedanta said that its earnings were likely to be higher than expected due to the higher prices for copper and zinc.
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