$1300 by the New Year?

Gold prices have rocketed to record heights close to $1 200 dollars an ounce as a "perfect storm" of market conditions propels demand for the precious metal, analysts said.

Gold, whose two main drivers are jewellery and investment buyers, hit a record 1,195.13 dollars an ounce on the London Bullion Market on Thursday.

The glamorous metal has won major support in recent weeks and months from a weak dollar, inflationary fears and increasing moves by central banks to diversify assets away from the greenback and into the commodity.

"It's all things coming together at the same time -- it's a perfect storm," Westhouse Securities mining sector analyst Mark Heyhoe says, adding that gold could strike 1,300 dollars by the New Year.

The metal has now surged by around 50 percent in value over the past 12 months, gaining about 14 percent in November alone.

"What we have had happen in the last three months is a marked change in how gold is being treated," Heyhoe said. "We have got central banks starting to buy gold again, after the huge sales we had a decade or so ago, and these are particularly the Asian central banks."

Gold hit the latest record after a purchase of IMF gold by Sri Lanka's central bank, before pulling lower as shock news from Dubai rattled world financial markets.

The International Monetary Fund (IMF) announced Wednesday it had sold 10 tonnes of gold to Sri Lanka's central bank for 375 million dollars as part of a restructuring of its financial resources.

India had bought 200 tonnes in October 30 for 6.7 billion dollars and Mauritius bought two tonnes in November for 71.7 million dollars. The metal draws strength from fears of higher inflation because it is regarded as a "safe-haven" investment in times of economic uncertainty.