GOLD has reached a 27-year high as record oil prices heightened concerns that inflation will accelerate as a slumping US dollar boosted the appeal of precious metals as an alternative investment. Silver also gained a 26-year high.

Oil in New York rose to a new high above $US98 a barrel and the dollar extended its slide to $US1.4666 against the euro, the lowest ever.

A weaker US currency makes the dollar-priced gold cheaper for holders of other currencies.

"We may see gold prices breaching the $US850 level tonight," said Kazuhiko Saito, strategist at Interes Capital Management Company in Tokyo. "It's like people are pushing gold prices toward the record."

In New York, bullion for immediate delivery rose $US14.83 to $US839.83 an ounce, the highest since January 1980, when it reached a record $US850 an ounce. Gold has gained more than threefold since the end of 2000, when it fetched $US272.25 an ounce.

Silver for immediate delivery jumped as much as US31c, or 2 per cent, to $US15.91 an ounce, the highest since December 1980. It has climbed 22 per cent this year, heading for a sixth straight annual gain.

Gold, used in jewellery and as an investment, has gained 31 per cent this year, heading for the seventh straight annual gain. The rise has helped boost shares of mining companies, including Newmont Mining Corp and Barrick Gold Corp.

Crude oil for December delivery rose as much as 1.5 per cent to $US98.17 a barrel in after-hours electronic trading on the New York Mercantile Exchange. That's the highest price since trading began in 1983. It traded at $US97.93 at Singapore early last night.

The dollar fell against the euro on speculation losses related to US subprime-mortgage defaults will prompt the US Federal Reserve to cut interest rates for a third time this year. Gold denominated in euros has gained 18 per cent in 2007.

"The price move of crude oil is unprecedented and no one knows when the subprime problem will end," Interes's Mr Saito said. "This has made funds look for gold and other commodities."

Investment in the StreetTracks Gold Trust, an exchange-traded fund backed by bullion, has risen 32 per cent this year to a record 598 tonnes.

In Japan, gold for delivery in October rose �75, or 2.5 per cent, to close at �3090 yen a gram ($US840 an ounce).