Gold surges above $900 as credit crisis
deepens By STEVENSON JACOBS
AP Business Writer
NEW YORK (AP) -- Gold prices briefly shot back
above $900 an ounce Thursday, surging for a second day as
a teetering U.S. financial system stirred panic among investors
and set off a scramble for safe places to put money.
Gold has gained over $110 in a frenzied two-day rally, including
the largest ever one-day price advance on Wednesday.
The metal's latest push came as the Federal Reserve stepped
up efforts to stem the worst financial crisis since the Great
Depression. The central bank pumped $55 billion into temporary
reserves in the United States to free up the strained financial
system. Hours earlier, the Fed joined other central banks
to flood world markets with dollars, hoping to stave off a
collapse of international credit markets.
The emergency moves gave some comfort to Wall Street a day
after a massive decline, but many investors, fearing more
turbulence in coming days, continued to shift funds out of
riskier investments like stocks and into the relative safety
of precious metals and U.S. Treasury bills.
The influx of money marked a sharp turnaround for gold, which
had seemed to be frozen in a monthslong lull since shooting
above $1,000 for the first time ever in March.
"This is a very scary time and everyone is asking one
thing: 'Where is the safest place to put my money?' Right
now, gold looks like a good place," said Kevin Grady,
a gold trader at MF Global in New York.
Gold for December delivery jumped as much as $75.50, or 8.8
percent, to $926 an ounce on the New York Mercantile Exchange
before easing back to settle at $897, still up $46.50. On
Wednesday, gold rose as much as $90 before settling $70 higher
at $850.50 an ounce, the biggest one-day jump ever.
Other precious metals also shot up Thursday. December silver
jumped $1.025 to settle at $12.70 an ounce on the Nymex. December
copper rose 2.35 cents to settle at $3.006 a pound, while
October platinum gained $51.30 to $1,137.60 an ounce.
A weaker dollar also boosted gold Thursday. When the greenback
falls, investors often buy gold, silver and other hard assets
to hedge against inflation and weakness in the U.S. currency.
But gold is most attractive during times of economic crisis.
The metal has long been considered a safe, alternative investment,
primarily because it's known for holdings its value over time.
"Even during the Depression, a kilogram of gold bought
you a new Ford, Chevy or Plymouth. And even now a kilogram
of gold still buys you a new Ford, Chevy or Plymouth, said
George Gero, vice president at RBC Capital Markets Global
Futures in New York.
Still, gold's trading pattern has been marked by extreme
volatility, and analysts noted that prices could fall as quickly
as they popped up. Thursday's rally was already being limited
by investors who were unloading positions to cash in on the
previous day's advance.
"Perhaps we've had a little too much, too soon on this
spike up," Gero said.
Other market watchers say gold has been due to break out
after its long slump. Demand for gold jewelry and other items
usually picks up around the U.S. holiday period and also the
traditional wedding season in India, a major gold buyer.