Silver hit its highest for more than three decades at $33.50-an-ounce and gold rose above $1,400-an-ounce for the first time in nearly seven weeks, while UK and European stock markets fell sharply.
The FTSE 100 Index plunged 68.19 points to 6014.8, wiping about £17billion from the value of Britain’s blue-chip companies, amid fears that rising oil prices will fuel inflation and dampen growth prospects.
Worries over oil supply disruption from mounting violence in Libya, a key member of the Opec cartel, and the risk of contagion into other oil-producing countries sent the Brent crude price more than $2 higher to close in on $105-a-barrel, its highest since September 2008.
David Buik, analyst at BGC Partners, said: “With political unrest gathering momentum in Libya and Bahrain, gold is proving to be a popular haven.”
David Jones, chief market strategist at IG Index, added: “Investors have definitely been in a ‘risk off’ mood today. Gold has been one of the most in-favour markets. It would be overdoing it to suggest a panic by investors.
“However, the closure of Wall Street for Presidents’ Day has not helped matters.”