March 14 (Bloomberg) -- Gold surged to a record $1,009 an ounce in New York as the Bear Stearns Cos. bailout and a plunging dollar increased demand for the precious metal. Silver also gained.

Bear Stearns got emergency funding from JPMorgan Chase & Co. and the New York Federal Reserve. The securities firm said its cash position had ``significantly deteriorated.'' The dollar fell to a record against the euro and a 12-year low against the yen. Gold has jumped 19 percent this year as the Standard & Poor's 500 Index fell 12 percent.

``Gold's assault on $1,000 is happening for a good reason,'' said James Turk, founder of GoldMoney.com, which had $337 million in gold and silver in storage for investors at the end of February. ``Gold is not only an inflation hedge, it's a catastrophe hedge. Gold is becoming increasingly important as the credit crunch continues to spiral out of control.''

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Gold futures for April delivery rose $6.20, or 0.6 percent, to $1,000 an ounce at 12:34 p.m. on the Comex division of the New York Mercantile Exchange. The price reached the highest ever for a most-active contract at 10:45 a.m., topping yesterday's record of $1,001.50. The metal has tripled in the past five years.

``Gold at $1,000 is a clear sign of a lack of confidence in the dollar and the Fed's handling of monetary affairs,'' said Adrian Day, president of Adrian Day Asset Management in Annapolis, Maryland.

Silver futures for May delivery climbed 24.5 cents, or 1.2 percent, to $20.665 an ounce. Before today, the price gained 37 percent.

Housing Slump

The worst housing slump in 25 years and more than $181 billion in bank losses and writedowns have forced the Federal Reserve to cut interest rates five times in six months. The federal-funds rate is at 3 percent, down from 5.25 percent in mid-September. The dollar is down 6.3 percent against a weighted basket of six currencies this year.

``The dollar and more shoes to fall in the credit arena will keep gold in demand as an alternative asset,'' said William O'Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey.

Shares of Bear Stearns, the second-largest underwriter of U.S. mortgage bonds, plunged as much as 53 percent in New York Stock Exchange composite trading.

The metal pared gains as the dollar reduced losses against the euro, which earlier climbed to a record $1.5688. Gold has gained 2.6 percent this week.

``With the dollar making a little bit of a comeback, you're seeing some gold investors take money off the table,'' said Nick Ruggiero, a trader at Eagle Futures Inc. in New York.

Seven-Year Rally

Gold has rallied for seven straight years, rebounding from a 20-year low of $253.20 on July 20, 1999, as mine supply has remained low and investment demand soared.

The StreetTracks Gold Trust, the biggest exchange-traded fund backed by bullion, began trading in November 2004 and reached a record 655 metric tons on March 10.

Compared with government holdings, the ETF would rank eighth behind Japan, according to data from the producer-funded World Gold Council. The U.S. is the biggest holder with 8,133 metric tons, or about 78 percent of its currency reserves, in gold.

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