Advertising

The Seattle Times Company

NWjobs | NWautos | NWhomes | NWsource | Free Classifieds | seattletimes.com

The Seattle Times

Business / Technology


Our network sites seattletimes.com | Advanced

Originally published Wednesday, September 17, 2008 at 12:00 AM

Comments (0)     E-mail article     Print view

Gold prices post biggest one-day gain ever

Gold prices exploded today — posting the biggest one-day gain ever in dollar terms — as fears of more credit market turmoil...

The Associated Press

NEW YORK — Gold prices exploded today — 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 (AIG) 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, a 158-year-old investment bank, filed for bankruptcy protection 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.

Before 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.

Copyright © 2008 The Seattle Times Company

More Business & Technology headlines...

E-mail article Print view      Share:    Digg     Newsvine

Comments
No comments have been posted to this article. Start the conversation.

advertising

Flood fears dampen business, home sales

UPDATE - 11:22 AM
Reports on consumer confidence, GDP tug at stocks

UPDATE - 11:28 AM
Banks earn $2.8B in 3Q; FDIC says dangers persist

A Bing deal for Microsoft, News Corp.?

Amazon, Wal-Mart escalate Web price war

Advertising

Video

New Beginnings Christian Fellowship
Coming in Sunday's Pacific Northwest Magazine: Pastor Braxton's mission is to preach a message that appeals to everyone.

PNW Magazine | Easy As Pie
Real Salt Lake wins MLS Cup
Raw Video | Real Salt Lake fans celebrate
Raw Video | Real Salt Lake receives the MLS Cup trophy
Raw Video | MLS Cup Opening Ceremony
Real Salt Lake fans enter Qwest Field
LA Galaxy's David Beckham
Real Salt Lake's Kyle Beckerman
MLS trophy arrives in Seattle

Marketplace

 
Most read
Most commented
Most e-mailed
 
 
Advertising