Crude oil and gold prices surged to fresh highs yesterday amid renewed dollar weakness as investors sought refuge from a second wave of credit turmoil.

West Texas Intermediate jumped more than $3 to a nominal record of $97.07 (€66.69) a barrel and traders warned it might test the $100-a-barrel level as soon as today if US crude oil inventories show another weekly decline.

The price jump was helped by a bullish report from the Energy Information Administration (EIA), the statistical arm of the US energy department, warning that "tight fundamentals" would continue to push up oil prices.

The EIA forecast that crude oil prices would "exceed $80 per barrel over the next several months" and trade above $75 a barrel in 2008 as "global oil markets will likely remain stretched".

The combination of strong crude oil prices and a weakening dollar boosted gold prices to a fresh 28-year high of $824.30 an ounce, just below its all-time high of $850 reached in January 1980.

Precious metals traders said investors were adding to their gold positions - no one was selling. David Holmes, head of precious metals at Dresdner Kleinwort in London, said a rise to $850 was "very much on the cards". John Reade, head of metals strategy at UBS in London, upgraded its one-month gold forecast to an "inevitable" $850 an ounce.

The dollar fell to a record low against the euro of $1.4571 as investors bet that the US Federal Reserve would further cut interest rates to prop up the economy hit now by a second wave of credit turmoil.

Sterling matched a near 26-year high against the dollar, rising to $2.0906 on speculation the Bank of England would keep interest rates on hold as the Fed cuts.