Gold up 3 percent

Gold prices shot up more than 3 percent on Monday to hit fresh record highs as investors stepped up buying of the yellow metal, whose luster has increased due to the dollar's weakness and deepening U.S. financial woes.

JPMorgan Chase & Co said on Sunday it would acquire stricken rival Bear Stearns for just $2 a share in an all-stock deal that values the U.S. investment bank at about $236 million.

The news sent the dollar tumbling to a record low against the euro as investors worried that there would be more casualties in the widening U.S. financial crisis.

The Fed cut its discount rate on Sunday and launched a new discount window facility for primary dealers.

"This morning's moves by the Fed clearly tells how serious the situation is in the United States. Gold is drawing a lot of safe-haven demand as you can't buy stocks or currencies because of this volatility," said Shuji Sugata, manager at Mitsubishi Corp Futures and Securities Ltd.

Gold's attraction as an alternative investment has helped boost the precious metal's price by more than 20 percent this year alone, as it hit successive record highs along the way.