March 7 (Bloomberg) -- Gold futures rose as the dollar fell to a record against a basket of major currencies, boosting demand for the precious metal. Silver also gained.

The U.S. Dollar Index, a weighted gauge against the euro, yen, pound and three other currencies, fell to the lowest since the basket started trading in 1973. The U.S. unexpectedly lost jobs for a second straight month in February, heightening speculation the Federal Reserve will slash borrowing costs for a sixth time since September.

``Further deterioration in the credit markets will continue to drive investors away from dollar-denominated assets, which will provide a strong bid for gold,'' said Stuart Flerlage, who helps manage more than $600 million at NuWave Investment Corp. in New York.

Gold futures for April delivery climbed $7.40, or 0.8 percent, to $984.50 an ounce at 8:58 a.m. on the Comex division of the New York Mercantile Exchange. The most-active contract reached a record $995.20 on March 5.

Silver futures for May delivery rose 24 cents, or 1.2 percent, to $20.465 an ounce. Before today, silver jumped 36 percent this year.

Gold jumped 31 percent in 2007 as the Fed initiated a series of cuts to the benchmark lending rate, sending the dollar 9.5 percent lower against the euro. Before today, the metal gained 17 percent this year, while the Standard & Poor's 500 Index dropped 11 percent.

The dollar index dropped as much as 0.7 percent to 72.462, sliding for the ninth straight session.

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

Last Updated: March 7, 2008 08:59 EST