Spot gold rose 5 US dollars in the short term to 1913.12 US dollars per ounce, or 0.59 per cent on the day, at 07:24 Beijing time.

Gold futures hit record highs as the dollar plummeted and global economic concerns boosted demand for safe havens, and the shift from the most active contracts to those already at record highs provided further impetus for the rally.

With US real interest rates negative and markets betting that the Fed will keep policy loose when it meets this week, a dollar index fell to its lowest level in more than six months. Inflows into gold-backed exchange traded funds (ETF) this year have surpassed the record set in 2009, with total holdings exceeding 3300 tonnes, an all-time high.

Contract switching is another stimulus to the rise in gold prices. Although the final figures were not released until the Asian trading session on Friday, December contracts surpassed August contracts on Thursday to become the most outstanding contracts. The December contract hit $1927.10 a troy ounce on Thursday, above the record high of $1923.70 for the most active contract in 2011. The contract was quoted at $1935.10 at 06:25 Singapore time on Monday.

The impact of the coronavirus pandemic on global growth has cemented gold's position as a safe haven, prompting an influx of investors.

But,Gold prices are also supported by rising geopolitical tensions, falling real interest rates, a weaker dollar and extensive stimulus measures by global governments and central banks to boost the economy.

The current environment even raises the possibility of stagflation, a rare combination of weak growth and rising inflation, which erodes the value of fixed-income investment. In the US, investor expectations of the bond market's inflation rate over the next decade, as measured by the bond market's break-even inflation rate, have risen over the past four months after a collapse in March.

The US bond market has always been a key indicator of concern and the driving force behind this gold investment boom.Gold has become an attractive hedging tool as yields on US Treasuries, excluding inflation, fall below zero.Traders are once again focusing on record low yields as hopes of a sharp recovery in US growth fade, fuelling expectations that the Fed will signal more easing in the future.

Investors are bound to get guidance from the Federal Reserve this week, which will meet from July 28 to July 29. Chairman Jerome Powell and his colleagues are expected to keep interest rates near zero and reiterate that they will remain so until the economy gets rid of the coronavirus and gets back on track.

Most analysts are still bullish on gold. Goldman Sachs Group said the metal could reach $2000 in the next 12 months, and Citigroup Inc believes there is a 30 per cent chance that prices will break that level by the end of the year.