(Bloomberg News) Gold futures surged to a record $1,588.90 an ounce as the dollar's slump and the European debt crisis spurred demand for precious metals as alternative assets. Silver surged the most since March 2009.

The greenback fell as much as much as 1 percent against a six-currency basket after Federal Reserve Chairman Ben S. Bernanke told Congress that the central bank is prepared to provide additional stimulus to bolster the economy. Yesterday, Ireland became the third nation in the European Union to have its credit rating cut below investment grade.

"The Fed is talking about more liquidity, not less," said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. "That's more money for the markets, and gold is enthused. Investors are running away from currency volatility."

Gold futures for August delivery climbed $24, or 1.5 percent, to $1,586.30 at 12:32 p.m. on the Comex in New York, heading for the seventh straight gain. The previous intraday record of $1,577.40 was on May 2. The spot price of the metal priced in euros and pounds also rose to all-time highs today.

Since Dec. 1, 2008, gold has doubled as the Fed kept interest rates at a record low and governments spent trillions of dollars to spur global growth. The Fed's second round of so-called quantitative easing, known as QE2 among investors, ended in June.

Yesterday, tonnage holdings in exchange-traded products backed by gold jumped 1 percent, the most in a year.

'Currency Exhaustion'

"People are getting currency exhaustion," said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago. "With the Fed mulling over a possible QE3, which will dilute the dollar, gold is the main beneficiary."

The Thomson Reuters/Jefferies CRB Index of 19 raw materials rose to a four-week high, led by precious metals and grains.

Gold for immediate delivery rose as much as 1.3 percent to a record $1,587.85. This year, the price has advanced 12 percent, heading for an 11th straight annual gain, the longest rally since at least 1920.

Before today, the MSCI All-Country World Index of equities rose 1.5 percent in 2011, and Treasuries returned 3.6 percent, according to a Bank of America Merrill Lynch index. The dollar had dropped 4.1 percent against the six-currency basket.

'Shock Waves'