Sept. 21 (Bloomberg) -- Gold rose to a 27-year high in London as the dollar sunk to a record low against the euro, spurring demand from investors seeking alternative investments. Silver advanced to a three-month high.

The dollar slumped on speculation the U.S. Federal Reserve will keep cutting interest rates. Crude oil rose to a record yesterday. Gold is seen by some investors as a hedge against inflation and further declines in the dollar.

``All the ingredients are there for a move higher,'' James Moore, an analyst with London-based TheBullionDesk.com, said in an interview. ``The dollar is weak, and weakening further. Oil prices are high.''

Gold for immediate delivery gained as much as $6.04, or 0.8 percent, to $739.30 an ounce in London. That's the highest since January 1980. It traded at $736.77 an ounce as of 10:02 a.m. local time. Silver for immediate delivery rose 19 cents, or 1.4 percent, to $13.55 an ounce, the highest compared with closing prices since June 6.

The U.S. currency traded at $1.4079 against the euro at 8:47 a.m. in London from $1.4064 late yesterday in New York, reaching a record high of $1.4120.

``The fundamental factors that pushed the gold prices higher are still present including the weakness in the dollar,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia.

Purchases of gold exchange-traded funds backed by bullion also rose. The StreetTracks Gold Trust has risen 14 percent in the past month to a record 577 metric tons.

To contact the reporter for this story: Danielle Rossingh in London at drossingh@bloomberg.net

Last Updated: September 21, 2007 05:09 EDT