Gold futures for December delivery on the Comex division of the New York Mercantile Exchange were up nearly 9% or $US70 to $US850.50 an ounce overnight, the biggest percentage gain in nine years.
In dollar terms, the jump represents the yellow metal’s biggest increase since 1980.
It is only a week since gold sank to an 11-month low, trading at $US745.50/oz on September 11.
However, with global financial institutions looking shaky, investors are returning to the typically safe haven of gold.
Meanwhile, spot gold was trading at $875.80/oz at 11:30am EST.
“Gold may reach $900 an ounce by week's end,” Toby Hassall, an analyst at Commodity Warrants Australia, told Bloomberg.
“As long as sentiment continues to worsen, it's likely we'll see upward pressure on gold prices.”
The less valuable of the precious metals, silver, also had big gains overnight, jumping 11% to $11.675/oz, its biggest percentage increase since 1979.
While gold is still trading well below its March high of $US1002.60/oz, the overnight increase was enough to boost local gold stocks.
Shares in Newcrest Mining were up more than 14% or $3.06 to $24.45, while Lihir Gold rose more than 18% or 39c to $2.53.
Sino Gold Mining jumped 25% or 89c to $4.44 and Dominion Mining shares were up more than 14% or 32c to $2.56.
