US gold eyes $1,000 on oil, dollar; silver jumps

NEW YORK, March 3 (Reuters) - U.S. gold futures rose to a
record high on Monday, nearing the historic $1,000 level,
fueled by a combination of inflation worries, a dollar slide
and strong investment demand amid a broad commodities rally.

Silver also reached a 28-year peak on the back of gold's
strength and robust industrial demand, while the platinum group
metals also gained sharply.

David Rinehimer, director at Citi Futures Perspective in
New York, said widespread investor demand had boosted
commodities and gold.

"In addition, there is a strong inverse relationship
between gold and the dollar. As the dollar weakens, it tends to
be supportive for commodities, and particularly gold,"
Rinehimer said.

At 11:30 a.m. EST (1630 GMT), gold for delivery in April
GCJ8 on the COMEX division of the New York Mercantile
Exchange jumped $12.70, or 1.3 percent, at $987.70 an ounce. It
hit a bottom at $975.50.

In earlier sessions, the April contract had soared to
$992.00, a record high for the fourth straight session.

The dollar dropped to a record low against the euro for a
fifth straight day on Monday on mounting worries over the
health of the U.S. economy.

The euro jumped to an all-time high above $1.5260 <EUR=>,
according to Reuters data.

Returns on U.S. holdings are eroding for foreign investors
and many see precious metals as hard assets that can protect
portfolios.

Thomas Winmill, portfolio manger who oversees $290 million
of assets of Midas Fund MIDSX.O in New York, said that a
negative real interest rate environment was prompting investors
to keep allocating funds to hard assets such as gold.

Record high crude oil prices also increased gold's appeal
as a hedge against inflation. U.S. crude futures CLc1 had
reached an all-time peak of $103.95 a barrel.

Spot gold <XAU=> was quoted at $984.70/985.60, up from
$970.80/971.60 at the close on Friday. London bullion dealers
fixed the afternoon spot price at $988.50.

Silver remained near its 28-year high on strong investor
buying and industrial demand.

COMEX's May silver SIK8 was up 53.0 cents, or 2.7
percent, at $20.445 an ounce, after surging to a 28-year high
of $20.740 earlier. It bottomed at $19.860 an ounce.

Spot silver <XAG=> fetched $20.36/20.41, up from the
Friday's close at $19.80/19.85. London silver was fixed at
$20.16.

Silver last traded at these prices was in November 1980,
when the Hunt Brothers of Texas tried to corner the market.

The active NYMEX platinum contract for April delivery
PLJ8 rose $52.00, or 2.4 percent, at 2,232.70 an ounce. Spot
platinum <XPT=> fetched $2,190/2,200 an ounce.

NYMEX June palladium PAM8 also rose $6.35, or 1.1
percent, to $583.00 an ounce. Spot palladium <XPD=> traded at
$583/587 an ounce.
(Reporting by Frank Tang; Editing by David Gregorio)