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Originally published October 6, 2010 at 1:13 PM | Page modified October 6, 2010 at 1:29 PM

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Gold hits another record as inflation fears grow

Gold prices hit a new record Wednesday and silver prices surged as investors bought up the precious metal to hedge against inflation.

AP Business Writer

Gold prices hit a new record Wednesday and silver prices surged as investors bought up the precious metal to hedge against inflation.

Gold for December delivery rose $7.40 to settle at $1,347.7 an ounce Wednesday, breaking the record it hit the day before when it settled at $1,340.30. Silver prices also surged, with December silver rising 30.6 cents to settle at $23.043 an ounce.

Silver's surge reflected that metal's increasing popularity as a reserve investment, said Spencer Patton, founder and chief investment officer for hedge fund Steel Vine Investments, LP.

Silver used to be valued more for industrial uses, being a chief ingredient for electronic devices like iPods and computers. But nervous investors are pulling out of currency and buying up silver because of its status as a precious metal.

"For every 10 gold commercials you see on TV, you see one for a silver dollar," Patton said. "You can just buy a lot more silver with your dollars than you can buy gold."

Inflationary fears are being the rise of both metals. With the U.S. Federal Reserve expected to announce new measures to stimulate a weak economy, most investors expect the value of the dollar and other currencies to fall.

Other metals also rose. Copper gained 2.65 cents to $3.7530 a pound. October palladium added $11.45 to settle at $589.65 an ounce and platinum rose $11.30 to settle at $1,712 a pound.

Grain and bean prices sagged after a rally Tuesday, when corn futures jumped as ethanol and livestock producers snapped up supplies that were relatively low after last week's sell-off.

Corn prices fell 2.5 cents to settle at $4.885 a bushel. Soybeans for November delivery fell 9.75 cents to $10.62 a bushel. Wheat for December delivery rose 5.25 cents to settle at $6.5825 a bushel.

Oil prices rose Wednesday as the dollar continued to weaken and stocks held their ground after Tuesday's big rally.

Gas has been following oil higher over the past week as stock markets rallied and the dollar fell. Crude traders often look to stock markets as a measure of overall investor sentiment, while oil, priced in dollars, gets cheaper for investors with foreign currencies when the dollar drops.

Benchmark crude for November delivery rose 41 cents to settle at $83.23 a barrel on the New York Mercantile Exchange.

In other Nymex trading, heating oil rose 0.52 cents to settle at $2.3078 a gallon, and gasoline rose 3.04 cents to settle at $2.1559 a gallon. Natural gas rose 12.2 cents to settle at $3.865 a gallon.

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