Gold futures surged on Thursday, nearing a record high of $970 an ounce causing the dollar to continue its fall against the euro and boosted the precious metal's appeal as an inflation hedge.
Escalating oil prices, a weak dollar and growing concerns that the U.S. economy is nearing a recession have increased investor interest in gold, which traditionally is seen as a safe haven from inflation and economic uncertainty because it's known for holding its value.
Gold for April delivery hit $969.30 an ounce on the New York Mercantile Exchange. Gold rose nearly 32 percent in 2007 and has gained more than 13 percent so far this year. The gains in gold followed the euro's surge to a new record of $1.5189.
Federal Reserve Chairman Ben Bernanke spent a second day on Capitol Hill, telling lawmakers that rising inflation is making his task more complicated. Bernanke hinted that the Fed stands ready to lower its benchmark interest rate to boost the economy, putting further pressure on the dollar and boosting the allure of precious metals.
The recent string of U.S. data has been appalling and this is putting significant pressure on the dollar and supporting gold, said Mark O'Byrne, executive director at Gold and Silver Investments Ltd., in a note.
The dollar index, which measures the greenback against a basket of six major currencies, fell 0.9 percent to 73.85.
Other precious metals also rose. Silver for March delivery added 49 cents to $19.70 an ounce after rising to a 28-year high of $19.845.
Nymex copper surged to a record $3.8965 a pound before easing back to $3.87 a pound, still up 3.2 cents