Fund managers' demand for gold and other commodities has hit record levels, according to new research, with investors favouring assets that protect against inflation. But fears are increasing that gold, which hit an all-time high this morning, is overvalued.

Fund managers have shifted substantially out of bonds into commodities, according to the latest monthly fund manger survey by Bank of America Merrill Lynch. A net 25% of fund managers are now overweight commodities, compared with a net 11% in October. It is the highest proportion since the survey first asked about commodities in April 2006.