Gold bar
Gold bar Reuters

Gold charged to a record high in early electronic trading Friday as a host of bad economic news from around the world drove investors away from stocks into the safety of the yellow metal, which since the beginning of the year has now risen more than 30 percent.

On the CME Comex the price of gold for December delivery, the most actively traded contract, jumped to $1859.10, up from Thursday's closing price of $1,822.

Fears of a double-dip recession in the U.S. -- suggested by the latest Philadelphia Federal Reserve report on manufacturing -- combined with growing nervousness about the health of European banks combined to lift gold to a yet another new high.

Traders reacted to word that one European bank had to tap a credit line with the European Central Bank, and news that even Swiss banks could be in trouble.

The danger for European banks is their massive holding of bonds issued by struggling euro zone economies like Greece, Portugal, Spain and Italy. The value of those bonds are plummeting and their interest rates, which move in the opposite direction of the price are soaring, which makes it difficult for those weak European economies to borrow. Unless leaders on the continent come up with a fix -- and fast -- European banks will need emergency funds.

News that the New York Federal Reserve lent the Swiss National Bank $200 million via its U.S. dollar swap lines in the week ending 17 August has done little to quell concerns over the European financial sector, strategists at RBC Capital Markets told MarketWatch.

Gold also looks increasingly attractive against the U.S. dollar and the euro, which was down against the U.S. dollar 0.1 percent. The U.S. dollar index fell 0.03 percent to $74.23.

Gold is the currency of the world at the moment, with the world convinced that the monetary and fiscal authorities are likely to do nothing right and everything wrong when it comes to resolving the world's current fiscal problems, Dennis Gartman, the economist who correctly forecast 2008's commodities slump, said in his daily Gartman Letter today, according to Bloomberg News.

Adding to global angst and the hunt for safety, Asian stock markets fell Friday. Japan's bourse fell 2 percent and Hong Kong's stock market was down more than 3 percent.

U.S. futures, an indication of what direction Wall Street will go when trading begins at 9:30 a.m. EDT were sharply lower.