Gold prices climb as investors seek safe-haven

Wednesday October 8, 2008 MYT 12:16:31 PM

NEW YORK: Gold prices kept rising Tuesday, approaching US$900 an ounce after another day of turmoil in financial markets encouraged buying of safe-haven assets. Silver also rose.

Investors remained skittish even after the Federal Reserve announced it would ramp up emergency efforts to clear obstructed credit markets and revive the economy.

The central bank said it would buy massive amounts of short-term commercial debt and in a speech Tuesday, Fed Chairman Ben Bernanke hinted that it might cut interests rates as well.

The measures, which follow last Friday's approval of a $700 billion financial bailout, failed to console Wall Street.

The Dow Jones industrials fell more than 500 points.

With few safe places to put money, investors flocked to gold.

The December contract jumped $15.80 to settle at $882 an ounce on the New York Mercantile Exchange, after earlier rising as high as $893.70.

On Monday, gold shot up $33 to $866.2 an ounce.

Gold, long considered an attractive investment during rough economic times, has seen a resurgence of late as the spreading credit crisis weighs down equity markets across the globe.

"This bailout plan has not been the magic bullet that many people hoped it would, so gold is catching some of the safe-haven bid from that,'' said Matt Zeman, head trader at LaSalle Futures in Chicago.

December silver rose 9.5 cents to settle at $11.38 an ounce on the Nymex, while December copper fell 15.55 cents to settle at $2.5345 a pound.

A slightly weaker dollar Tuesday also supported gold.

A falling greenback encourages investors to buy precious metals as a hedge against inflation or weakness in the U.S. currency.

In energy markets, oil prices rebounded from the previous day's big drop as investors halted selling to see whether the economic bailout can gain traction and stem a widening global downturn.

Light, sweet crude for November delivery rose $2.25 to settle at $90.06 a barrel on the Nymex, after earlier trading as high as $93.02.

In other Nymex trading, heating oil rose 3.17 cents to settle at $2.5057 a gallon, while gasoline futures rose less than half a penny to settle at $2.0628.

In agriculture trading, major grain prices traded mixed on the Chicago Board of Trade.

Wheat for December delivery rose 8 cents to settle at $6.0325 a bushel, while December corn fell 7 cents to settle at $4.17 a bushel.

November soybeans added 4 cents to settle at $9.26 a bushel.


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