Gold prices reached the highest level since August 15 at $1,305.25 an ounce as the International Monetary Fund (IMF) lowered its projection for global economic growth for 2015 at 3.5%, 0.3% from an earlier projection.

In the wake of increased volatility on the global front, gold is emerging as a safe haven asset class.

“Previously, gold had been subjected to volatility and a wide trading band of around $1,200 to $1,900 an ounce but the current trading sentiment showed that the precious metal was ‘redefining’ itself as a safe haven asset class,” said Pong Teng Siew, research head at Inter- Pacific Securities.

The events of last week namely the de-pegging of Swiss Franc to Euro and the sharp fall in China’s stock market precipitated the ascension of gold prices.

To further exacerbate the situation, the franc is one of the five global reserve currencies, and its nearly 20% appreciation starting January 15 has painfully hit a wide variety of asset classes worldwide, putting some of them on the edge of becoming ‘toxic assets’.

China, at least up until recently, used to be a locomotive of global manufacturing, generating an immense demand for natural resources. Now, the financial turmoil in Shanghai and Shenzhen only adds to the bitter situation in various global commodities markets, mainly oil.

The alarming situation on global markets has prompted investors to search for safe havens for their money, and while the uncertainty in the global markets, except for the US, prevented investors from excessively buying stock in Europe or Japan, gold has become one of the most sought after assets.

The Swiss National Bank (SNB) cancelled the Franc’s peg to the euro ahead of the today’s policy meeting at the European Central Bank (ECB). The ECB is widely anticipated to announce stimulus measures, triggering a slump in the euro FX rate, therefore the Swiss opted to let their currency appreciate rather than go down with the euro.

“While gold tends to weaken with the euro, which is expected to fall further against the dollar as the ECB looks set to announce quantitative easing this week, gold also benefits from haven demand because of the uncertainties,” Huang Wei of Huatai Great Wall Futures Co, said as quoted by Bloomberg. “We expect gold to be supported ahead of the elections in Greece and seasonal Lunar New Year demand.”

Gold’s role as hedge instrument has been increasing since the global recession of 2008, but at this point, amid the speculations about a possible re-monetization of gold, the yellow metal is universally perceived as a safe haven against financial shocks and short-term turmoil.