LONDON (Thomson Financial) - Gold prices surged as more poor US data weakened the dollar and as high oil prices continued to fuel inflation jitters.

The dollar fell as US companies reportedly cut 23,000 jobs in February according to the ADP National Employment Report, leaving the job figures well below the 15,000-job increase expected. The data suggests total non-farm payrolls, due Friday from the Labour Department, fell by about 8,000 last month.

At 1.55 pm, gold was trading at 970.10 usd per ounce against 964.95 usd in late New York trades yesterday. On Monday, the metal hit an all-time record high of 989.33 usd an ounce.

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Gold moves in line with oil prices as investors hedge against inflation, and in the opposite direction to the dollar as bullion is seen as an alternative asset. Gold's value has soared on such purchases and on safe haven buying as the global economy remains shaky and vulnerable to more weakness.

'Gold should attract further safe haven and stagflation investment over the next three months,' said Robin Bhar, UBS (nyse: UBS - news - people ) analyst. Yesterday Bhar raised his one month price forecast to 1,025 usd per ounce and lifted his three month prediction to 1,075 usd from around the 750 usd mark.

Prices had fallen sharply yesterday after oil retreated by nearly 3 usd a barrel to below the 100 usd mark, for the first time in almost a week, and after the dollar rebounded from near record lows against the euro.

Spot platinum was down at 2,169 usd against 2,241 usd an ounce in late New York trades yesterday, when it hit a new all-time record high of 2,299.00 usd an ounce before receding sharply.

Analysts said while platinum is correcting lower for now, the metal will no doubt head higher in the longer term, supported by dollar weakness and ongoing supply constraints in top producer South Africa.

Silver was down at 19.85 usd from 20.72 usd per ounce yesterday. On Monday, it hit a 27 and a half-year high of 20.60 usd an ounce, amid strong demand from investors who see it as a cheaper alternative to gold.

'Despite technical signals suggesting silver is perhaps more overbought than gold, we still believe the metal will outperform gold this year, as investors, seeking anti-inflationary/safe-haven assets, favour the cheaper alternative,' said Moore.

Palladium fell to 526 usd against 553.00 usd, having yesterday hit a 6 and a half-year high of 592.50 usd amid record gains in its sister metal platinum.

Looking ahead, investors will keep an eye on more key US data which could move the dollar, and in turn, nudge gold either way.

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