Gold rallied to a fresh all-time high this morning, supported by fears over rising inflation after stronger-than-expected US CPI data yesterday and amid record high oil prices.

The precious metal, which is viewed as a safe store of wealth, is typically bought as a hedge against rising inflation.

Renewed weakness in the US dollar after yesterday's Federal Reserve minutes, which laid the groundwork for further rate cuts, has further boosted gold's appeal as an alternative investment, analysts said.

At 9.55 am, spot gold was at 944.90 usd per ounce against 934.50 usd in late New York trade yesterday. Earlier, it hit a new record high of 948.90 usd.

The precious metal has taken support from a strengthening in the oil price -- which yesterday hit an all-time high of 101.32 usd a barrel.

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Warnings over inflation from St Louis Federal Reserve Bank president William Poole have also fuelled gold buying.

Poole said yesterday in a speech at Truman State University that the Federal Reserve must not ignore the possibility of rising inflation as it battles sluggish growth.

Inflation fears are also on the rise following a stronger-than-expected firming of headline CPI yesterday, analysts said. Some now fear the US economy could sink into stagflation, a combination of rising inflation and economic stagnation.

'The second successive WTI close above 100 usd a barrel and a higher-than-expected US inflation outcome were the triggers for a move to a new all-time high,' said UBS (NYSE:UBS) analyst John Reade.

'We believe that many investors have bought and held gold because of fears of stagflation, coupled perhaps with worries about financial system risk.'
All the other precious metals were also sharply higher this morning, with platinum setting an all-time record, while silver and palladium were at their strongest for years.

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