Gold rose within 0.5 percent of its highest since 1980 in London as the dollar slumped to a record low against the euro, boosting demand for bullion as an alternative investment. Silver also gained.

The dollar declined on speculation economic reports will show U.S. growth is losing momentum, adding to pressure on the Federal Reserve to lower borrowing costs. The U.S. central bank cut its benchmark interest rate Sept. 18 for the first time in four years. The dollar dropped today to a 15-year low against a basket of six of its major peers.

"If there is another rate cut, we will undoubtedly see a lower U.S. dollar and a much firmer gold price,'' Ross Norman, director of London-based TheBullionDesk.com and a former trader of physical bullion, said in an interview today.

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