Gold prices continued to advance Wednesday on expectations that lower interest rates will weaken the dollar, increasing the desirability of alternative investments.

Gold scheduled for delivery in December rose $5.80, or 0.8 percent, to $729.50 at the close of the normal trading session on the New York Mercantile Exchange. Gold is usually seen as a hedge against inflation.

On Tuesday, the U.S. Federal reserve cut the benchmark Fed funds rate by half a percentage point to 4.75, easing the rate at which banks make overnight loans to each other.

The Fed's first cut in four years was a bid by money policy makers to spur economic activity to prevent a downturn in the housing and financial sectors from spreading to the rest of the economy.

Stocks and commodities soared on the move. The lower rate, however, sent the dollar to record lows against several currencies.

A weaker dollar can also increase the attractiveness of dollar-denominated assets to foreign investors who can buy more with relatively stronger currencies.

On Monday, Gold rose to its highest price since 1980. Heavy interest in gold investing sent the StreetTracks Gold Trust exchange traded fund to a new yesterday. The fund, which is backed by bullion, rose to a record 576 metric tons.