Gold Surges, Hits New All-time High Of $1,045

SARA LEPRO

NEW YORK (AP) — Gold prices surged to a new high Tuesday as investors sought a safe harbor from a falling dollar and inflation.

Gold for December delivery rose to as high as $1,045 an ounce, surpassing a previous intraday high of $1,033.90 logged in March 2008, just days after Bear Stearns Cos. collapsed.

Gold also had a record high closing price, finishing the day at $1,039.70 an ounce, up $21.90, or 2.2 percent. Some analysts see gold rising to $1,100 in the coming days.

Gold's advance was stoked by a tumbling dollar, which hit a 14-month low against the Australian currency after Australia became the first major country to raise interest rates since the onset of the financial crisis.

The move signals that Australia believes its economy is strengthening enough to withstand a slight increase in borrowing costs, and made the Australian currency a higher-yielding and thus more attractive investment to fund managers versus the U.S. dollar.

The Federal Reserve has said it plans to keep U.S. interest rates at a record low of near zero for some time as one of several tools it's using to shore up the U.S. economy.