Feb. 29 (Bloomberg) -- Gold rose to a record in Asia as the weak dollar and record oil prices spurred demand for the precious metal as an alternative asset and hedge against inflation.

The U.S. economy expanded less than forecast in the fourth quarter as gross domestic product rose at a 0.6 percent annualized rate. The dollar fell to the lowest in almost three years against the yen today and to an all-time low against the euro yesterday. Crude oil rose to a record $103.05 a barrel today.

``The U.S. dollar is falling precipitously and that's a major boost for gold,'' Wallace Ng, chief trader for precious metals in Asia Pacific at Fortis Bank, said by phone from Hong Kong today. ``We saw funds continue to pile into gold.''

Bullion for immediate delivery gained as much as $2.63, or 0.3 percent, to $973.38 an ounce, and traded at $971.70 at 12:31 p.m. Singapore time.

Gold futures traded on the Comex division of the New York Mercantile Exchange also rose to record this morning. Gold for April delivery gained as much as $8.50, or 0.9 percent, to $976 an ounce before trading at $973.60 at 12:33 p.m. Singapore time in after-hours electronic trading.

The dollar headed for its biggest monthly loss against the euro since September as a cooling economy prompted traders to bet the Federal Reserve will cut interest rates at least twice more this year.

The dollar declined to 104.58 yen, the weakest since May 2005, before trading at 104.79 yen as of 12:37 p.m. Singapore time. It traded at $1.5187 per euro, after touching $1.5229 yesterday, the weakest since the euro began trading at about $1.17 in January 1999.

`Little Choice'

``The feeble GDP figures reinforced sentiment that the Fed will have little choice but to lower rates in mid-March despite the more-than-obvious signs of inflation hanging over the economy,'' Jon Nadler, analyst at Kitco Minerals & Metals Inc., said in a report yesterday.

Silver, trading near a 27-year high, ``looks like having more upside'' than gold, Fortis Bank's Ng said.

Silver for immediate delivery gained as much as 8 cents, or 0.4 percent, to $19.83 an ounce before trading at $19.81 at 12:42 p.m. Singapore time. It touched $19.85 yesterday in New York, the highest since 1980.

Still, ``sooner or later'' the gold market will ``adjust to negative news once speculators buying interest dries out,'' Wolfgang Wrzesniok-Rossbach, head of marketing and sales at Hanau, Germany-based Heraeus Metallhandels Gmbh, wrote in a report on Feb. 25. Significantly lower prices were expected in the second half of the year, he wrote.

Gold for February 2009 delivery on the Tokyo Commodity Exchange gained 0.2 percent to 3,303 yen a gram ($979 an ounce) at 1:49 p.m. local time.

Gold for June delivery on the Shanghai Futures Exchange rallied 0.9 percent to a record 226.50 yuan a gram ($991 an ounce) before trading at 225.59 at the 11:30 a.m. local time break.

To contact the reporter for this story: Feiwen Rong in Singapore at frong2@bloomberg.net;

Last Updated: February 28, 2008 23:57 EST