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.