Across financial markets, the risk appetite of investors is returning in a big way as fears about the economy and financial system are eclipsed by relief and a hunt for assets that were shunned earlier this year.

Gold prices and government bond yields have provided a barometer of fear during the turmoil in credit and financial markets. This week, as the dollar rallied, gold fell to its lowest price this year, giving up the 19 per cent advance it had made since January. On Friday, bond yields extended their sharp move upwards during April.