Gold rockets to high near $950

London: Gold and platinum set historic highs in choppy trade yesterday, with strong oil prices, a struggling dollar and supply worries boosting investor interest.

Silver hit a 27-year high above $18 an ounce, a spike of 22 per cent this year, while palladium jumped more than nine per cent to a six-and-half-year high before paring gains.

"The outlook for gold remains positive given the expectations for continued dollar weakness, further Fed rate cuts and inflationary and macroeconomic concerns," Suki Cooper, precious metals analyst at Barclays Capital, said.

"Although speculative length remains elevated, we would expect further safe-haven buying to buoy prices," she said.

Spot gold hit a high of $948.60 an ounce and was quoted at $944.70/$945.50 at 1505 GMT, against $934.80/$935.60 late in New York on Wednesday.

Oil prices fell, but traded not far from this week's record highs above $100 a barrel.

US crude for April delivery was down 88 cents at $98.82 a barrel by 1349 GMT. London Brent was down 84 cents at $97.58 a barrel. The March contract, which expired on Wednesday, hit a record of $101.32, before closing at $100.74 a barrel.

Oil's latest spurt has taken it close to its all-time inflation-adjusted high of $102.53 hit in April 1980.

Oil has averaged $93.02 a barrel this year, up nearly a third on the average in 2007 of $72.30.

Gold is generally seen as a hedge against oil-led inflation. It often moves in the opposite direction of the dollar, as a weaker currency makes gold cheaper for other currency holders.

The dollar slipped, weighed down by minutes from the Federal Reserve's January policy meeting, which affirmed expectations of further US interest rate cuts.

Fed action

Markets have priced in the risk of another half percentage point rate cut at the Fed's March meeting, which would further erode the dollar's appeal to global investors.

"At the moment, it appears to be investor demand which is the real driving force behind it. And that is influenced by things such as a weak dollar, risk aversion and inflationary fears," said Daniel Hynes, metals strategist at Merrill Lynch.

"There is a real possibility of a spike above $1,000 an ounce, although I am not convinced at this stage about its longevity above that price," he said.