June 4 (Bloomberg) -- Gold prices rose on speculation that the slumping dollar will spur inflation, boosting the appeal of precious metals as a hedge. Platinum surged more than $55 an ounce to the highest since September.

In May, the dollar fell 6.4 percent against a basket of major currencies, the biggest drop in 24 years. The greenback resumed its decline today, sending commodities higher. The Reuters/Jefferies CRB Index of 19 raw materials rose as much as 2.1 percent.

“Gold is rising on demand for a safe harbor,” said Philip Gotthelf, the president of Equidex Brokerage Group in Closter, New Jersey. “We still have considerable uncertainty about the dollar.”

Gold futures for August delivery rose $16.70, or 1.7 percent, to $982.30 an ounce on the Comex division of the New York Mercantile Exchange. Yesterday, the price reached $992.10, the highest for a most-active contract since Feb. 24.

Platinum futures for July delivery jumped $48.80, or 3.9 percent, to $1,293.30 an ounce on the Nymex. Earlier, the price reached $1,301.90, the highest since Sept. 9.

Platinum climbed for the seventh straight session, the longest rally since January. Holdings in ETF Securities Ltd.’s exchange-traded fund backed by the metal have jumped 74 percent this year.

Silver futures for July delivery gained 58.5 cents, or 3.8 percent, to $15.895 an ounce on the Comex.

This year, silver has jumped 41 percent, platinum is up 37 percent and gold has gained 11 percent.

‘Fears of Inflation’

Gold will probably reach $1,200 by the end of the year, Gotthelf said. Futures reached a record $1,033.90 in March 2008. On Feb. 20, the metal reached $1,007.70, this year’s high.

“Given background fears of inflation and fiat currency devaluation, the metal will continue to be viewed favorably by investors,” James Moore, an analyst at TheBullionDesk.com in London, said today in a note. “We doubt it will be long before gold tests the high from February.”

A global recession has prompted central banks and governments to cut interest rates close to zero and pledge more than $13 trillion for stimulus programs and rescue measures.

Gold will top $1,000 in the near future, Frank McGhee, the head dealer at Integrated Brokerage Services LLC, said today in an interview with Bloomberg Television from Chicago.

“There is a tremendous amount of liquidity that has been put into the system,” McGhee said. “There is probably more liquidity that is going to have to be added. We are not out of the woods by any means.”

Today, crude oil rose to a seven-month high and gasoline surged after Goldman Sachs Group Inc. said prices may reach $85 a barrel by the end of the year.

Oil and gasoline “are really the stories that are driving a lot of the rally” in commodities, McGhee said.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net.

Last Updated: June 4, 2009 15:40 EDT