Gold prices gain on safe-haven buying
NEW YORK — Gold prices inched higher Tuesday as a sharp sell-off in stocks drove investors to look for traditionally safe places to park their money.
A six-month rally in stocks came to a halt amid fresh worries about the health of the banking industry and the economy, leading investors to take money out of stocks and move it to safe-haven assets like the dollar, government bonds and gold.
Gold for December delivery added $3 to $956.50 an ounce on the New York Mercantile Exchange, as all the major stock indexes dropped more than 1.5 percent, including the Dow Jones industrials, which lost about 160 points in afternoon trading.
The decline in stocks came even after fairly upbeat data on manufacturing and housing. Analysts say the market has come to expect improving data in those industries, but worries about record-high unemployment are causing investors to question a more than 50-percent surge in stocks since March. Wall Street is anxiously awaiting the government’s jobs report for August on Friday.
Gold’s move higher on Tuesday was at odds with its usual trend for much of the year, in which it moved in tandem with stocks and other commodities, rising and falling along with investors’ hopes for an economic recovery.
Analysts said gold’s cachet as a safe-haven investment could be coming back again as jitters return to the stock market. Investors seeking an exit to a bumpy ride in stocks will often park money in safe-haven assets like Treasurys, other kinds of bonds and the dollar.
“For much of this year, gold has tended to trade with the equity markets, not against them,” said James Steel, analyst with HSBC in New York. “Perhaps some of the safe-haven buying, which generally goes into the dollar or the fixed income markets, has redirected itself to gold.”
Silver, which has lagged behind gold this year, rose along with its fellow precious metal on Tuesday, adding 13.7 cents to $15.06 an ounce.
Other metals, though, lost some ground as the dollar moved higher against the euro and the British pound. A stronger dollar makes commodities more expensive to foreign buyers.
October platinum fell $17.20 to $1,226.80 an ounce.
December copper futures shed less than a penny to $2.8185 a pound. Aluminum and palladium also fell.
Also putting some strain on metals prices were ongoing concerns about a potential lag in Chinese demand, as well as new worries that the government’s popular Cash for Clunkers program could lead to a glut of scrap metal supply.
Elsewhere on the Nymex, energy prices tumbled. Energy prices have been volatile in recent weeks amid unrelenting fears that energy supply will outpace demand for some time.
Light, sweet crude for October delivery fell $1.91 to settle at $68.05 a barrel. Crude has fallen 6.4 percent in just two days.
Gasoline for October delivery fell 2.77 cents to $1.7822 a gallon and heating oil fell 4.96 cents to $1.7589 a gallon.
Natural gas shed 15.6 cents to settle at $2.821 per 1,000 cubic feet.
Prices for soft commodities like cotton, coffee and sugar also fell.
On the Chicago Board of Trade, December wheat futures lost 11.5 cents to $4.8725 a bushel, while corn for December delivery fell 10.5 cents to $3.1925 a bushel.
November soybeans dropped 24 cents to $9.5550 a bushel.
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