Gold edges closer to $1,000

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NEW YORK (CNNMoney.com) -- Gold prices surged to a record Wednesday, closing to within $5 of the $1,000 milestone, as a combination of record-high oil prices and the continued devaluation of the dollar brought buyers back into the market.

Gold for April delivery rose as high as $995.20 an ounce before easing back to $990.60, up $24.30, surging past the previous trading high of $978.50 an ounce, set last week.

Gold prices have flirted with the psychologically important $1,000-an- ounce mark in recent weeks as concerns about the health of the U.S. economy have made the precious metal more attractive to investors looking for a safe haven.

Meanwhile, oil prices surged nearly $5 a barrel amid concerns about dwindling supplies and OPEC's decision to hold output steady.

The dollar has been trading at record lows against the euro and the yen as the Federal Reserve slashes interest rates in an effort to stimulate economic activity and stave off a recession.

Economic news out Wednesday was mixed. Stocks rose following a stronger-than-expected reading on the services sector and signs that troubled bond insurer Ambac Financial may receive enough funding from a consortium of banks to preserve its top-tier credit rating.

Elsewhere, a report from payroll services company ADP said private sector employment in February was down more than expected. Separately, a measure of worker productivity was revised higher for the fourth quarter, with the report's inflation component revised upward as well.

"I think it (gold) could accelerate into the four-digit range if we get more bad numbers later this week," said John Nadler, a senior analyst at Kitco Bullion Dealers in Montreal.

Nadler said gold's record-breaking run has been fueled by the dollar's "lack of vigor, which has been precipitated by the bad news that has been nonstop since September."

He pointed out that the Federal Reserve's rate cutting campaign has put a lot of "cheap money" into the economy that investors are using to buy commodities such as precious metals.