Gold rose $5.70 an ounce to a record close of $1,100.80. It has soared 31.9% this year and 335% since its July 1999 low of $252.80. Making gold gleam:

•The dollar. Gold prices rise when investors lose faith in paper currency, and the dollar, the premier currency, has been clobbered recently. It takes $1.50 to buy a euro, vs. $1.26 in March.

•Central banks. Some central banks are buying gold for their reserves. India disclosed last week that it had bought 200 tons of gold from the International Monetary Fund. The purchase not only signaled an increased demand for gold but had an important psychological effect on the gold market, says Jeff Nichols, senior economic adviser to Rosland Capital. "It says to individual investors that if it's OK for central banks to buy gold, shouldn't we be buying also?"

•Exchange traded funds. Several ETFs now buy gold bullion, and they're wildly popular with individuals and institutions. Many pension funds are prohibited from buying physical commodities, such as gold bars, but they can buy gold ETFs.

Gold prices got a boost from the G-20 meeting in St. Andrews, Scotland, where finance ministers from 19 major countries and the European Union discussed policy. "They agreed to monetary accommodation for a good time to come," says Ron Simpson, economist at Action Economics.

In the case of the U.S., that means near-zero interest rates. A three-month Treasury bill yields 0.06%, for example, vs. 0.37% for a German three-month bill. Yields in commodity-rich countries have been rising steadily, and investors have been chasing those yields, too.

Other big traders borrow in U.S. dollars and buy high-yielding securities elsewhere, a strategy called the carry trade.

"Global investors have acquired a taste for risk," says Paul Kasriel, chief economist for Northern Trust. "They're looking at Australia, Brazil, Canada, seeing higher yields and seeing commodity prices rising."

By moving money from currencies of countries with low interest rates to those with higher rates, investors are also driving down the value of the U.S. dollar.

Continued worries about U.S. deficits also have pushed investors away, says Dan Denbow, co-manager of the USAA Precious Metals and Minerals fund.

Although gold is seen as an inflation hedge, its long-term record is spotty. Nearly 30 years ago, in January 1980, gold peaked at $850 an ounce. Adjusted for inflation, that'd be $2,228 today.