By Pham-Duy Nguyen

Sept. 17 (Bloomberg) — Gold surged the most in nine years as investors sought the safety of precious metals on concern that the credit crisis will deepen, leading more financial institutions to fail. Silver soared the most since 1979.

Equities tumbled after the Federal Reserve took over the biggest U.S. insurer. The cost of borrowing dollars for three months jumped the most since 1999 as banks hoarded cash. Central banks in the Phillipines and Venezuela said they may buy gold. In March, the metal reached a record as the government steered JPMorgan Chase & Co. to buy Bear Stearns Cos.

“People are worried about money being safe in a bank,” said Ron Goodis, the futures trading director at Equidex Brokerage Inc. in Closter, New Jersey. “With paper assets in question, gold represents the textbook storehouse of value.”

Gold futures for December delivery gained $70, or 9 percent, to $850.50 an ounce on the Comex division of the New York Mercantile Exchange. The dollar increase was a record for a most-active contract, and the percentage gain was the biggest since Sept. 28, 1999. The metal reached the all-time high $1,033.90 on March 17.

Silver futures for December delivery rose $1.158, or 11 percent, to $11.675 an ounce, the biggest gain since Dec. 31, 1979. Gold is up 1.5 percent this year, while silver still is down 22 percent.

Gold for immediate delivery surged $84.67, or 11 percent, to $864.42 at 4:42 p.m. New York time. Spot silver was up 15 percent to $12. The dollar fell 1.2 percent against a weighted basket of the euro, yen and four other major currencies.
[ Read Full Article]

Gold fell below $800 an ounce and silver slumped to the lowest in more than a year as the U.S. government’s seizure of mortgage lenders Fannie Mae and Freddie Mac boosted the value of the dollar and reduced the appeal of bullion as an alternative asset.The U.S. currency traded near the highest level since October against the euro while gold fell to within 3 percent above its low this year. The dollar index, which tracks the greenback against currencies of six major U.S. trading partners, rose to a one-year high yesterday.

“It appears that the market is torn between those investing in gold ahead of the Indian wedding season and those selling gold as a result of the strength of the U.S. dollar and weak economic conditions,” Jonathan Barratt, managing director of Commodity Broking Services, said in a report yesterday.

Bullion for immediate delivery fell 0.7 percent to $796.15 an ounce at 1:42 p.m. in Singapore. Silver for immediate delivery fell to as low as $11.84 an ounce, the lowest since Aug. 31, 2007, before trading at $11.8475.

Read Full Bloomberg Article Here

Gold, little changed in London, may gain as higher U.S. consumer prices and a declining dollar buoy the appeal of the metal as a hedge against inflation and further weakness in the global economy.

The metal may gain before U.S. reports today that will probably show housing starts fell to a 17-year low last month and manufacturing shrank for an eighth month. Prices paid by consumers in June gained the most since 2005 on higher costs for fuel and food, the U.S. Labor Department said yesterday.

“The elevated credit risk and heightened inflation awareness should ensure good support for gold and silver,” Walter de Wet, head of commodities research at Standard Bank Group Ltd. in Johannesburg, wrote in a report today.

Gold for immediate delivery fell $1.42, or 0.2 percent, to $958.53 an ounce as of 11:54 a.m. in London, after rising as much as 0.7 percent in earlier trading. Futures for August delivery dropped $3.30, or 0.3 percent, to $959.40 an ounce on the Comex division of the New York Mercantile Exchange.

The dollar fell against the euro and neared a two-month low against the yen on speculation credit-market losses in the U.S. will deepen, undermining the case for the Federal Reserve to raise interest rates.

Read Full Bloomberg Article Here

UPDATE 12 Noon 06/10/08: Gold fell the most in a week as the dollar climbed for the second straight day, reducing the appeal of the precious metal as an alternative investment. Silver also dropped.

The dollar reached a three-month high against the yen and rose against the euro after Federal Reserve Chairman Ben S. Bernanke said risks to the economy have faded, spurring speculation that interest rates will rise. Before today, gold climbed 38 percent in the past year as the dollar fell 15 percent against the euro.

“The Fed has shifted their concern from economic weakness to talking about fighting inflation,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “Ultimately, gold is an international currency, and its biggest influence is still the dollar.”

Gold futures for August delivery tumbled $16.80, or 1.9 percent, to $881.30 an ounce at 10:37 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest percentage drop since May 29.

Silver futures for July delivery fell 26.5 cents, or 1.5 percent, to $16.945 an ounce. Before today, the price advanced 15 percent this year, while gold climbed 7.2 percent.

Gold rallied 39 percent from Sept. 17 to March 17, reaching a record $1,033.90, as the Fed slashed borrowing costs after a housing slump and a credit squeeze threatened to push the U.S. economy into a recession.Read Full Bloomberg Story Here

By Pham-Duy Nguyen

Gold tumbled the most in almost six weeks as the dollar rallied, reducing the appeal of the precious metal as an alternative investment. Silver plunged more than 5 percent.

The dollar climbed as much as 0.8 percent against a weighted basket of the euro, yen and four other major currencies on speculation that the Federal Reserve may begin to raise U.S. borrowing costs this year to curb inflation. Crude oil dropped below $128 a barrel after reaching a record $135.09 on May 22.

“With the dollar stabilizing, gold could fall quite a bit,” said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. “There’s a lot of talk about inflation, which works both ways for gold. If the Fed does start tightening, that will strengthen the dollar and could really pop the commodity bubble.”

Gold futures for August delivery dropped $23.30, or 2.6 percent, to $881.70 an ounce on the Comex division of the New York Mercantile Exchange. The percentage drop was the biggest for a most-active contract since April 18. The metal fell for the third straight day. The price reached a record $1,033.90 on March 17.

Silver futures for July delivery plummeted 90 cents, or 5.2 percent, to $16.515 an ounce, the biggest drop since March 20.

Read Full Bloomberg Article Here