Gold passes $900 per ounce as a haven from stock risks

Associated Press

September 30, 2008

NEW YORK - Gold prices bolted above $900 an ounce yesterday after the legislative defeat of a U.S. financial bailout drove investors to pull money out of stocks and buy safe-haven assets.

Other commodities traded mostly lower as investors fretted that failure to eventually approve the rescue plan could deepen the economic crisis and sharply curb demand for energy, building supplies and other goods. Oil prices fell more than 10 percent.

Investors scrambling for secure places to put money quickly turned to short-term Treasury bills and gold, which has long been considered a safe alternative investment during times of economic crisis.

Gold for December delivery jumped as high as $932 an ounce on the New York Mercantile Exchange before settling at $894.40, up $5.90. In aftermarket trading, prices jumped back up to $913 an ounce.

Other precious metals fell. December silver lost 47.8 cents to settle at $13.025 an ounce; December copper fell 16.8 cents to $2.9065 a pound.

In energy markets, oil prices plunged more than $10 a barrel as traders bet that the bailout's failure could prolong the economic downturn and drastically reduce energy demand.

Light sweet crude for November delivery sank $10.52, or 10.1 percent, to settle at $96.36 on the Nymex, after earlier dropping as low as $95.04.

Crude has fallen almost $25, or 20 percent, in the past week amid intense talks to hammer out a deal for the $700 billion bailout.

Worries about the rejection of the bailout also weighed on grain prices. Wheat for December delivery fell 48 cents to settle at $6.68 a bushel on the Chicago Board of Trade, while December corn lost 30 cents to settle at $5.13 a bushel.