Gold futures rose for a second session Thursday, as the metal's appeal as an inflation hedge increased after the Bank of England cut its key interest rate to the lowest level of 1%. Gold's attractiveness as a safe haven and an inflation hedge has pushed its prices more than 3% higher this year, compared to a 6% decline in the S&P 500 equity index and a 5% loss in the Reuters/Jefferies CRB commodities index. Holdings in the largest exchange-traded fund backed by gold hit a new record Wednesday. In Thursday trading, gold for February delivery rose $12, or 1.3%, to end at $913.60 an ounce on the Comex division of the New York Mercantile Exchange. The February contract expires Feb. 20, with open interest, or the total amount of outstanding contracts, remaining at 351,400 ounces as of Thursday. "Safe-haven buying interest remained prevalent," said Peter Grant, senior metals analyst at USAGold. With central banks around the world cutting interest rates, it "seems like the world will soon be awash in paper money, and that is very bullish for gold." While the current financial troubles brought deflation worries to the economy, analysts said in the long term the economic stimulus plans and lower interest rates policies adopted by many countries will boost inflation rates. In more active trading, the March gold contract rose 1.3% to close at $914.20 an ounce. Gold inventories held by Comex for future delivery stood at 2,803,376 ounces as of Wednesday, according to the latest data from the exchange. Rate cuts and the economy The Bank of England continued a campaign of aggressive rate cuts Thursday, cutting its key lending rate by half a percentage point to a record low 1%, as policy makers battle a potentially deep and lengthy recession. The European Central Bank, as expected, left its key lending rate unchanged at 2%. See full story. In the U.S., the number of new claims for state unemployment benefits surged to their highest level since 1982, the Labor Department reported Thursday, a sign that the U.S. labor market is deteriorating at a rapid rate. See Economic Report. Economists expect the Labor Department to report Friday that payrolls have fallen by 525,000, which would be the fifth straight month of at least 400,000 jobs lost. Meanwhile, January retail sales numbers were coming in Thursday, and for the most part, they weren't pretty. See full story. New record at SPDR Holdings of SPDR Gold Trust , the largest gold ETF, hit a new record of 859.49 tons Wednesday, according to the latest data from the fund. The total was almost 80 tons, or 10%, higher than that reported a month earlier. The SPDR Gold Trust added 0.8% to $89.93. In other metals action Tuesday, March copper fell 2% to $1.50 a pound, while March silver added 2.2% to $12.75 an ounce. March palladium rose 2% to $202.20 an ounce, and the April contract for sister-metal platinum gained 1.3% to $982 an ounce. In other equities, shares of Barrick Gold Corp. , the world's largest gold mining company, gained 3.1% to $38.23, while Goldcorp Inc. advanced 1.5% to $30, and South Africa's Gold Fields Ltd. rose 2.4% to $10.74. The Amex Gold Bugs Index , which tracks the share prices of major gold companies, rose 0.9% to 298.91. The iShares Gold Trust ETF edged up 1% to $90.05, while the iShares Silver Trust ETF rose 2% to $12.68. The Market Vectors-Gold Miners ETF gained 1.2% to $34.48.

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