Gold nears $1,100, extends gains as dollar weakens

By SARA LEPRO AP Business Writer

NEW YORK (AP) - Gold prices have rallied to another new high on the back of a weaker dollar.

Gold is up $2.40 at $1,087.30 an ounce, after earlier rising to as high as $1,098.50.

News that India's central bank bought nearly $7 billion worth of gold from the International Monetary Fund triggered a frenzy of buying on Tuesday that carried over to Wednesday as the dollar weakened.

Demand for gold has risen steadily as record-low interest rates pressure the dollar and drive investors to look for higher returns in other assets.

The Federal Reserve on Wednesday kept its benchmark interest rate at a record low of near zero, signaling that it is not yet concerned about inflation. But the low rates will likely weigh on the dollar further, supporting higher commodity prices.