A gold pocket watch given to the British boat captain who rescued more than 700 passengers from the Titanic has sold at auction for a record-breaking £1.56m ($1.97m).

The 18-carat Tiffany & Co timepiece was given to Sir Arthur Rostron, then captain of passenger ship RMS Carpathia, by survivors he rescued.

Auctioneer Henry Aldridge and Son in Wiltshire said it was the highest amount ever paid for Titanic memorabilia, and that it was bought by a private collector in the US.

The sale demonstrates the “enduring fascination” with ill-fated the ocean liner, it added.

Sir Arthur changed course of the Carpathia, which was on its way from recent York for Europe, after the ship’s wireless operator picked up the distress call “we’ve struck ice, arrive at once”.

It set off at packed speed and reached the Titanic two hours after it had sank in the North Atlantic on 15 April 1912.

The watch was given to Sir Arthur by the widow of the richest man on the Titanic, John Jacob Astor, and two other widows of wealthy businessmen lost when the vessel struck an an iceberg and broke apart – taking the lives of more than 1,500 passengers and crew.

It carries the inscription “presented to Captain Rostron with the heartfelt gratitude and boost in worth of three survivors of the Titanic April 15th 1912 Mrs John B Thayer, Mrs John Jacob Astor and Mrs George D Widener”.

Sir Arthur received the gift from Mr Astor’s wife at a lunch at the household’s mansion on Fifth Avenue in recent York City, according to the auction house.

“It was presented principally in gratitude for Rostron’s bravery in saving those lives, because without Mr Rostron, those 700 people wouldn’t have made it,” auctioneer Andrew Aldridge said.

The previous Titanic memorabilia record was set in April when a gold pocket watch, recovered from the body of Mr Astor, sold for £1.175m at the same Devizes-based house.

Prior to that, the violin that was played as the ship sank held the record for the highest amount paid for a Titanic artefact for 11 years after being sold for £1.1m in 2013.

Mr Aldridge said the truth the record had been broken twice this year demonstrated the “ever-decreasing supply and an ever-increasing demand” for memorabilia related to the ship.