LONDON, Sept 20: The euro closed in on $1.41 on Thursday, smashing previous record highs for the European currency, as traders speculated about the chances of further cuts in US interest rates.

Federal Reserve chairman Ben Bernanke was delivering a speech to the US Congress on Thursday amid expectations he might hint at the possibility of another cut in US interest rates.The Fed slashed US lending rates by 0.50 percentage points on Tuesday to help the US economy overcome problems in the housing market and tightening credit conditions.

After breaching $1.40 for the first time earlier on Thursday, the euro went on to hit $1.4098 in late European trading.

The price of gold also surged, striking $738.60 to reach its highest level in 27 years.

The precious metal is gaining support from the weak dollar, which makes dollar-denominated gold cheaper for investors using other currencies, as well as fears about inflation fuelled by record oil prices.

Analysts at Capital Economics said the falling dollar was because of expectations that US interest rates will be cut further and could fall below eurozone rates.

A reduction in interest rates undermines a currency because assets in other countries become relatively more attractive for investors.—AFP