Gold notched up a fresh record in excess of $1,600 a troy ounce on Tuesday morning as debt crises on both sides of the Atlantic continued to dominate investors' minds.

The precious metal has surged 8.4 per cent in little more than two weeks as fear has swept financial markets, burnishing the appeal of haven assets such as bullion.

Gold has now set four new records in five trading sessions. On Tuesday it hit a new nominal peak of $1,609.51 a troy ounce, before softening to $1,603 by mid-morning in London after a successful Spanish bond auction gave investors some short-term relief.

Silver has also rallied more than 20 per cent since the start of the month, on Tuesday hitting $40.84 a troy ounce, the highest since its precipitous collapse in early May.

James Steel, precious metals strategist at HSBC in New York, said that investors had been left with few assets to hold as crises struck on both sides of the Atlantic.

"Taken singly, the US debt ceiling impasse or the ongoing EU sovereign debt crisis would be sufficient reason to trigger a gold rally," he said. "But taken together, the combined affect on gold prices is even more bullish as investors, wary of dollar and euro assets, seek a safe alternative."