Gold hits record high

Investors pushed the price of gold to its highest point on record and gold bugs were calling for the yellow metal to top $1,300 US an ounce in the not-too-distant future.

On the New York Mercantile Exchange, the December gold futures contract touched$1,276.50 US an ounce, before scaling back to $1,271.70.

The safe-haven investment gained ground after fresh data from Europe pointed to a lethargic global economy.

Eurostat, the EU's statistics office, said industrial production in the eurozone was flat in July, against expectations for a modest increase, and a survey of German investor sentiment was much weaker than expected.

Beyond individual investors, central banks have also begun to stockpile gold to pad their reserves and as a hedge against the declining value of the U.S. dollar.

Just last week, the government of Bangladesh bought 10 tons of gold for roughly $400 million US from the International Monetary Fund.

"All that was accomplished in Europe is that a trillion dollars later, we still have the same problems and the gold market is asking who is going to pay for it," said John Ing, president ofToronto-based investment research houseMaison Placements Inc.

Years of cheap credit are fueling inflationary fears, and gold does well in that environment, said Ing, who predicts spot prices will head towards $1,350 an ounce in the near term.

Gold stocks jumped on the S&P/TSX composite index in Toronto. Shares ofBarrick Gold Corp., one of the biggest producers in the world, gained $1.02, or2.3 per cent, to $46.42 after touching a high of $47 earlier in the day.

Rival Goldcorp Inc. gained$1.50, or3.5 per cent,to close at$44.10 after touching $44.82 earlier in the session.

Gold's strong performance helped push the benchmark S&P/TSX index up 43.12 points, or 0.4 per cent, to 12,192.98.

Meanwhile, the Dow Jones industrial average lost17.64 points to close at 10,526.49 after a boost from news that U.S. retail sales rose 0.4 per cent last month, the best advance since March. Economists had expected a slightly smaller increase of 0.3 per cent.

The Canadian dollarwas at 97.3 cents US,down 0.04 of a cent.