Gold hits record high after Bernanke announced rate cuts that will increase inflation

NEW YORK (AP) – Gold soared to a record high Thursday after Federal Reserve Chairman Ben Bernanke pledged to cut interest rates, undermining the dollar and boosting demand for the metal as a safe investment.

Other precious metals traded mixed, and agricultural futures fell.

Bernanke said the central bank was ready to act aggressively to prevent the economy, weakened by turmoil in the housing and credit markets, from sliding into a recession.

Some economists predict the Fed will slash its key interest rate by a half percentage point it meets Jan. 29-30. Others expect a more modest quarter percentage point cut, in light of high energy prices and inflation worries.

An ounce of gold for February delivery on the New York Mercantile Exchange jumped to $897.30, a fresh high, before easing back to $892.80, up $11.10.

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