By Neil Dennis
From Financial Times:

The dollar wilted against other leading currencies on Wednesday as financial markets were rocked again by fears over subprime mortgages.

Asian and European equity markets slumped, while the flight to safety lifted government bonds after Bear Stearns, the US investment bank, declared that its two subprime-focused hedge funds were “virtually worthless”.

The dollar hit a new low of $1.3833 against the euro, and a new 26-year trough against the pound at $2.0548.

But few investors were interested in pushing the currency too low ahead of an important day for US data and central banker testimony. Consumer price inflation is due later in the session and is forecast to increase modestly after a rise in petrol prices. Meanwhile, Ben Bernanke, chairman of the Federal Reserve is expected to reiterate concerns over lingering inflation pressure.

And from Reuters:

Gold gained on Wednesday as the dollar tumbled to a record low against the euro, but dealers are cautious ahead of a testimony by U.S. Federal Reserve Chairman Ben Bernanke.

Silver and platinum also rose. Tokyo gold futures rebounded to track a firm cash market, while the newly launched “mini” gold contracts saw a decline in turnover.

Spot gold hit an intraday high of $667.10 an ounce, not far from last week’s five-week high of $669.05, before dipping to $666.00/666.60, still higher than $664.60/665.40 late in New York on Tuesday.

“I think there has been a little bit of improvement in investor interest in gold. I certainly think the weakening in the U.S. dollar has been a factor in that,” said David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney.

“Depending on what happens to the U.S. dollar, it would be possible for gold to move in above $670 an ounce in the near term,” said Moore, who pegged the downside at $660.