Rising against all currencies on Tuesday, Gold broke above $1200 an ounce as world stock markets sank for the third time in 5 sessions."We are not bullish on Gold because of inflation expectations," says Walter de Wet at Standard Bank, "but because of monetary policy. "Inflation-linked bonds now see inflation averaging only 1.18% per year over the next 10 years. So we expect monetary policy to remain accommodative for longer. Accommodative policy favors especially Gold," according to Walter de Wet

The British Pound and European Euro today got back some of their early losses against the US Dollar, but high risk assets continued to fall regardless of the gains. Versus the Japanese Yen, the Euro fell to ¥109 – its lowest level since Dec. 2001, and more than one-third below the record peak of August 2008. New York ‘s Dow Jones index broke below the 10,000 level which was first breached on the way up in early 1999. Reasons for this are numerous.

Crude oil prices continue to sink towards $68 per barrel. Silver Prices dropped back towards Friday’s lows. European worries."We have some risk, we have the situation in Europe we’re watching very closely, but…the economy is doing fairly well so far," "We’ll see how things proceed through the fall and into 2011." said US Federal Reserve executive James Bullard, president of the St.Louis Fed, in an interview with Reuters. Ten out of 17 primary dealers on Wall Street see the sentiment of the Federal Reserve hiking interest rates in 2011, says the newswire. London ‘s inter-bank lending rate, Libor, today rose further above 0.50%, which has more than doubled in the last 90 days, hits a 10-month high, and suggests growing concerns over institutional bank liquidity.

The global financial crisis is typically said to have begun on 9 August 2007, when Libor leapt and interbank lending roze. After the Bank of Spain seized control of a failing competitor this weekend, 4 Spanish "caja" savings banks today announced plans to merge. "When a clear, large negative shock threatens to pull the [business] cycle down into severe contraction," said Bank of England policymaker Adam Posen in a speech last night, "central bankers…have to intervene, and do so pro-actively. "No one should be over-confident that the shock can be costlessly offset or restored fully to status quo ante bellum."

Gold Bullion sales meantime continued to expand in the retail-investment market, with the US Mint reporting May-to-date sales of Gold Eagle coins in excess of six tonnes. Australia ‘s Perth Mint is taking on new staff to help cope with demand. Germany ‘s ProAurum coin shop online today showed 216 of the 246 precious-metal products it carries as "Not available". In the institutional Gold Investment market, New York’s SPDR Gold fund – the world’s largest single exchange-traded gold trust – added 1.3% more bullion to its holdings on Monday as demand for its shares rose.

The trust has added 77 tonnes to its hoard so far this month, taking it to all-time records above 1230 tonnes. "Investors are clearly seeing the ETF as cheap here," says one London dealer. "It felt overall [on Monday] as if last week’s long liquidations were for the most part done," say Swiss dealers at MKS Finance in a note, "and the market could start from a fresh base."

India home to the world’s hungriest physical gold market – "Demand for gold in Q1 has been robust and growth in value terms was in double-digits, close to 40-45%," says Ajay Mitra, managing director for India and the Middle East at marketing-group the World Gold Council on the strength of gold.