http://biz.yahoo.com/ap/080917/gold_prices.html
Gold prices post biggest 1-day gain ever
Wednesday September 17, 2:45 pm ET
By Stevenson Jacobs, AP Business Writer
Gold makes biggest 1-day gain eve as investors flock to safe-haven assets
NEW YORK (AP) -- Gold prices exploded Wednesday -- posting the biggest one-day gain ever in dollar terms -- as fears of more credit market turmoil unnerved investors and triggered a flood of safe-haven buying.
Gold for December delivery rose as much as $90.40, or 11.6 percent, to $870.90 an ounce in after-hours trading on the New York Mercantile Exchange after jumping $70 to settle at $850.50 in the regular session. That was the biggest one-day price jump ever; gold's previous single-day record was a $64 gain on Jan. 29, 1980.
The huge rally came after the government moved overnight to rescue troubled insurer American International Group Inc. with an $85 million bailout loan. The Federal Reserve stepped in after AIG, teetering on collapse from losses tied to the subprime crisis and the credit crisis, failed to find adequate capital in the private sector. The emergency measure came a day after Lehman Brothers Holdings Inc., a 158-year-old investment bank, filed for bankruptcy after failing to find a buyer.
Fearing more tightening of credit markets, investors reacted swiftly and began dumping stocks and socking money into gold, silver and other safe-haven commodities. Gold is especially attractive during times of crisis because the metal is known for holding its value.
Jon Nadler, analyst with Kitco Bullion Dealers Montreal, said buying accelerated as rumors spread across trading floors that another financial firm may be in trouble.
"The psychology right now has everyone asking, 'Who's next?," Nadler said. "If another big bank falls, we could see an implosion and that has people very worried."
A weaker dollar also boosted gold prices. A falling greenback encourages investors to shift funds into hard assets like gold and other commodities that are bought as hedges against inflation and weakness in the U.S. currency.
Prior to the rally, gold had fallen 25 percent since surging to record levels above $1,000 an ounce in March.
"The same market participants who got out of gold are coming back in now. This is the start of an upward move," said Carlos Sanchez, analyst with CPM Group in New York, who predicted prices could climb back to $1,000 by year's end.
Silver prices also jumped. The December contract soared $1.158 to settle at $11.675 an ounce. December copper, however, fell 4.65 cents to settle at $3.0425 a pound.
|
