Gold traded on the Shanghai Gold Exchange has reached a three-month high as uncertainty grows over China's ability to sustain the rapid rates of economic growth seen over the past decade.
Concerns over China's high level of debt in the "unfolding credit crunch" is having an unforeseen and dramatic impact on gold prices, as investors urgently stock up on the precious metal. This is being seen as a form of financial insurance against high levels of debt.
"Gold lost 30pc and silver nearly 40pc last year," cites Adrian Ash, head of research at gold trading platform BullionVault.com. He adds: "The world economy will struggle to deliver the entire good news price in by that crash. But China's unfolding credit-crunch looks central right now."
Gold prices have unexpectedly shot up more than 10pc to surpass $1300 an ounce for the first time since November 2013, against the prevailing forecasts for weaker demand made by many industry experts at the beginning of 2014.