Gold reached its highest level since April 1981 when it hit an intra-day peak of $510.30 a troy ounce yesterday in Asian trading. Japanese investors were particularly active as they looked to use the metal as a hedge against the declining yen.

However, gold prices retreated from their peaks in European trading to $506.60/$507.40, down about $2 from the late quote in New York on Monday. The rise to a 24½-year high followed a succession of new peaks over the past fortnight that has seen bullion move past the $500 level for the first time since 1987 and break the 1983 high of $509.10.