NEW YORK - GOLD prices surged to levels approaching US$1,000 (S$1,440) per ounce on Thursday amid caution by financial market players and worries about the gaping US budget deficit.

In late New York trade, gold was fetching US$997.70 per ounce after moving as high as US$999.50 on the New York Mercantile Exchange.

That neared the highs of the year of US$1,006.29 reached on February 20.

Gold, which is often seen as a hedge against inflation and economic turmoil, hit an all-time record price of 1,032.70 dollars in March 2008.

'A surge in safe-haven buying as the equity market performance continued to deteriorate and the dollar weakened boosted prices,' said Suki Cooper, analyst at Barclays Capital.

Dax Wedemeyer at US Commodities said that 'you have a lot of investors starting to pull some of their investments out of the equity market (and buy) gold, because they may think stock markets have run their course, they're starting to lose momentum.'

'There's no doubt that there are both seasonal and long-term trends working in gold's favour,' said Josh Lipton of the financial website Minyanville.

Because gold is priced in dollars, the rise could reflect waning confidence in the US currency at a time when US budget deficits are hitting record levels, some noted.

'If the rise in gold is telling us something it is that traders are growing more risk-averse which is not surprising,' said Kathy Lien at Global Forex Trading.

'However such a big rise on such a quiet trading day is usually triggered by other factors besides risk appetite.

'A technical break is part of the reason for the move but there is also strong demand from big players.

'This is exactly the type of market environment that could attract demand from China and Russia who have been looking to diversify their dollar reserves.' -- AFP