Gold Hits Record on Weak Dollar

By STEVENSON JACOBS
AP Business Writer

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NEW YORK (AP) -- Gold prices trekked higher Thursday, touching a record $975 an ounce as an inflationary combination of high oil prices and a falling dollar pointed investors to the relative safety of precious metals.

Other commodities traded mixed, with silver extending its highest gains since 1980 and wheat futures retreating further from record territory.

Soaring oil prices, a weak dollar and growing worries that the U.S. economy is sliding into a recession have fed investor appetite for gold, which traditionally is seen as a safe haven from inflation and economic uncertainty because it's known for holding its value. Gold rose nearly 32 percent in 2007 and has gained more than 13 percent so far this year.

Also weighing on investors were comments Thursday by Federal Reserve Chairman Ben Bernanke, who told Congress in a second day of testimony that rising inflation was complicating the central bank's job. Bernanke hued to his message 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.

"You have an almost perfect storm for a bull market in precious metals," said Michael Gross, analyst with OptionSellers.com. "Bernanke's on television and he's pretty much saying the Fed is going to continue to cut rates, and that's really pressuring the dollar and fueling the bullish fire for gold and silver."

Lower interest rates can boost the economy but tend to depress the dollar, encouraging investors to shift funds into hard assets like precious metals and other commodities.

Gold for April delivery added $6.50 to settle at $967.50 an ounce on the New York Mercantile Exchange. In aftermarket trading, the contract rose to $975 an ounce - a new all-time high and within striking distance of the psycologically important $1,000 mark.

Other precious metals also rose. Silver for March delivery added 43 cents to settle at $19.640 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 settle at $3.8635 a pound, still up 2.55 cents.

The dollar's steep decline against the 15-nation euro has been a major driver behind gold's advance from less than $650 an ounce in January 2007. The dollar traded lower Thursday versus the euro, which fetched $1.5215.

The falling dollar has also given a boost to crude prices, which rebounded Thursday as the prospect of lower interest rates brought an influx of fresh investment capital to the oil market.

Light, sweet crude for April delivery rose $2.95 to settle at a record $102.59 a barrel on the Nymex. Prices continued rising after the Nymex closed, setting a new trading record of $102.97.

Other energy futures also rose Thursday. March gasoline futures rose 1.8 cents to settle at $2.4957 a gallon on the Nymex, while March heating oil futures rose 7.45 cents to settle at $2.8456 a gallon.

In agriculture markets, wheat futures plummeted in an erratic session, falling further from record-highs reached in recent days.

Wheat for May delivery dropped 85 cents to settle at $11.65 a bushel on the Chicago Board of Trade, after earlier rising as high as $12.45 a bushel. Wheat hit an all-time high of $13.495 a bushel on Wednesday.

Other agriculture futures rose Thursday, with soybeans breaching the $15 a bushel mark for the first time. Soybeans for May delivery jumped 37.25 cents to settle at $15.125 a bushel on the CBOT. The contract later rose to a record $15.155 a bushel in aftermarket trading.

March corn added 18.25 cents to settle at $4.1425 a bushel.

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