U.S. gold surges to record on Bear Stearns, dollar

NEW YORK, March 14 (Reuters) - U.S. gold futures rose 1
percent to a record high on Friday, trading firmly above the
$1,000 an ounce, lifted by a record low dollar and as investors
fled to bullion as a safe haven due to a worsening financial
market crisis.

Bear Stearns Chief Executive Alan Schwartz said that the
U.S. investment bank's liquidity position in the last 24 hours
had significantly deteriorated, and that JPMorgan Chase and the
Federal Reserve Bank of New York agreed to provide secured
funding to Bear as necessary. [ID:ID:nN14389680\]

"It is indicative of how serious the financial crisis is,
and the impact that it has on financial firms in the whole
financial arena," said Bill O'Neill, managing partner of LOGIC
Advisors in Upper Saddle River in New Jersey.

"This is not a positive thing in my view. This is indicative
of the kind of crisis that we are in. I do view this as bullish
for hard assets," O'Neill said.

At 10:33 a.m. EDT (1433 GMT), the active gold contract for
April delivery GCJ8 on the COMEX division of the New York
Mercantile Exchange jumped $10.40 or 1.1 percent to $1,004.30 an
ounce. It traded between a bottom of $991.70 overnight and a
record high of $1,007.30.

Investors often turn to gold as insurance in times of
financial market jitters and economic uncertainties.

U.S. stocks had dropped as much as 2 percent, while Bear
Stearns stock had nosedived as much as 50 percent. The U.S.
stock market trimmed losses and was down about 1 percent.

The dollar fell to a fresh 12-1/2-year low against the yen
and a record low against the euro on the Bear Stearns liquidity
news, increasing fear of a deep U.S. recession.

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

Spot gold XAU= firmly breached the historic $1,000 level
on Friday, after U.S. gold contracts burst through the
psychological barrier on Thursday due to a struggling dollar
and inflation fears.

Spot gold XAU= was quoted at $1,001.55/1,002.25, up from
$991.00/991.80 at the close Thursday. London bullion dealers
fixed the morning spot price at $997.00 an ounce.

George Gero, vice president of RBC Capital Markets Global
Futures in New York, said that investors continued to favor
hard assets as gold was trading at all-time highs.

"Thousand-dollar gold may have legs now with media attention
bringing new investors to the market, while palladium and silver
are catching up as well," Gero said.

Gold is up 20 percent this year. In January it surpassed
the historic milestone from January 1980. That year, bullion
peaked at $850 an ounce against a backdrop of high inflation
linked to strong oil prices, the Soviet intervention in
Afghanistan and the Iranian revolution.

COMEX's May silver SIK8 was up 41.0 cents, or 2 percent,
at $20.83 an ounce. It traded between a bottom of $20.320 and a
high of $20.975.

Spot silver XAG= jumped to $20.74/20.79 from $20.42/20.47
at Wednesday's close. London silver was fixed at $20.41.

The active NYMEX platinum contract for April delivery PLJ8
rose $9.50 to 2,107.00 an ounce. Spot platinum XPT= fetched
$2,102/2,112.

NYMEX June palladium PAM8 was 65 cents lower to $515.25
an ounce. Spot palladium XPD= was at $509/514.
(Reporting by Frank Tang, editing by Matthew Lewis)