Gold prices shot up more than 3% to fresh record highs of 1032.20 as investors steeped up buying of the yellow metal whose shine has increased due to the dollar's weakness and worsening US financial woes. Gold which is seen as an alternative investment was supported and seems more attractive against a combination of high inflation due to strong oil prices and the everlasting weak dollar.

Oil prices jumped to an all time trading high of $111.80 a barrel after opening today's session at $110.10 a barrel as the tumbling US dollar and plunging stock markets encouraged investors to seek shelter in commodities.

Interest rate cuts in the US further weaken the dollar and analysts blame the weak dollar for oil's recent rally. The Fed is also expected to cut the benchmark interest rates at its regularly scheduled monetary policy meeting on Tuesday increasing the inverse link between the dollar and oil prices.

Investors fled the dollar after a surprise move by the US Feds where they cut in discount rates to provide cash to financially ease the financial market turmoil pushing the battered greenback deeper into multiyear lows. This in hand boosted the appeal of the precious metal increasing its demand and thus increasing its price.