By Pham-Duy Nguyen
Feb. 20 (Bloomberg) -- Gold futures rose to a record $949.20 an ounce after energy costs jumped to the highest ever, boosting the appeal of the precious metal as a hedge against inflation.
Crude oil rose to a record for a second straight day, reaching $101.32 a barrel and extending the rally in the past year to 73 percent. Gold has touched a record 11 times this year, after jumping 31 percent in 2007 as U.S. inflation accelerated at the fastest pace since 1990.
``A strong close in oil helped drag gold to a record,'' said Tom Hartmann, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California. ``There's not a lot of people willing to sell the market. The big number on the table here is $1,000.''
Gold futures for April delivery traded at $947.80 at 5:05 p.m. in electronic trading on the Comex division of the New York Mercantile Exchange after reaching the record. During floor trading, the contract closed at $937.80, up $8 from yesterday.
Gold for immediate delivery also climbed to a record $945.60 an ounce.
The precious metal has more than tripled in price during a seven-year rally. Last year's gain was fueled by Federal Reserve interest-rate cuts that helped send the dollar down 9.5 percent against the euro.
A housing slump and mounting subprime-mortgage losses spurred the Fed in September to initiate a series of interest- rate cuts, the first since 2003, to bolster the economy. The federal funds rate is at 3 percent, down from 5.25 percent in mid-September.
`Relatively Low' Rates
Interest-rate futures show a 90 percent chance the Fed will cut the benchmark lending rate to 2.5 percent by March 18, compared with a 68 percent chance a week ago.
Fed officials said ``relatively low'' interest rates may be needed for some time to counteract a slowing U.S. economy, according to minutes of conference calls and a late January meeting that were released today.
Gold last reached a record on Jan. 30 after the Fed slashed rates.
``Central governments are choosing economic activity over sound currency,'' Chip Hanlon, who helps manage $1.4 billion as president of Delta Global Advisors Inc. in Huntington Beach, California, said yesterday in an interview. ``They're not serious about fighting inflation, so gold continues to benefit.''