Capital Gold Group Report: INVESTORS SEEK SAFETY IN FINANCIAL CRISIS; GOLD RISES ABOVE $900; DOW DROPS 778 POINTS - WORST POINT DROP EVER
METALS STOCKS
Gold rises on safe-haven buying after plan fails
NEW
YORK (MarketWatch) -- Gold futures rose Monday as investors sought
safe-haven in the precious metal amid fresh bank woes across the
Atlantic and after the U.S. House of Representatives voted against the
$700 billion bailout plan.
Gold for December delivery rose $5.90, or 0.7%, to close at $894.40 an
ounce on the Comex division of the New York Mercantile Exchange. After
market closed, gold continued to rise more than $15 to above $910 in
electronic trading after the House rejected the proposed financial
bailout package.
"It would be hard to
invent a scenario that could be more bullish for gold than right now,"
said Mark O'Byrne, executive director at Gold and Silver Investment.
"Bailout or no bailout, gold is going a lot higher due to a broad based
flight to quality."
The House vote was 205
for and 228 against. The rejection of the plan could mean disruption in
financial markets and another attempt by officials to craft a
compromise plan that will get a majority vote.
"[Metals]
trading will remain extremely volatile in the days ahead as the markets
digest the implications of the bailout," wrote Edward Meir, an analyst
at futures brokerage MF Global.
Bank woes
The vote failure was a sharp blow to the Bush administration and
bipartisan rallying efforts from leaders in Congress who warn that the
country is on the brink of an economic precipice. See full story.
Injecting further disruption in the global financial system, bank
troubles extended across the Atlantic over the weekend.
Citigroup Inc. on
Monday agreed to buy the banking operations of Wachovia Corp. Citigroup
will absorb $42 billion of losses on Wachovia's $312 billion pool of
loans, the Federal Deposit Insurance Corp. said. See full story.
In Europe, the British government on Monday nationalized Bradford &
Bingley after investors and lenders lost confidence in the mortgage
bank, leaving it unable to fund its operations. See full story.
Meanwhile, Fortis received an 11.2 billion euro ($16.37 billion)
lifeline from the governments of the Netherlands, Belgium and
Luxembourg on Sunday. See full story.
"Gold's safe haven credentials are set to come into their own again as
the global financial and capitalist system itself is creaking at the
seams," said O'Byrne.
Rising dollar
Gold's gains, however, were limited by a stronger dollar. Europe's own
banking troubles put the euro and the British pound under heavy selling
pressure. Further signs of slowing euro-zone economic activity in
September and data showing that the U.K. mortgage market virtually
ground to a halt in August also added to the gloom.
The euro traded at
$1.4514, down from $1.4608 late Friday in North American action. The
pound slumped to $1.8180, down from $1.8413. The dollar index, a measure of the greenback against a trade-weighted basket of six major
currencies, rose 0.4% after jumping as high as 1.5% earlier.
"The dollar is sharply higher against the euro, and as a result is
pounding a variety of commodities, from energy to metals," said Meir.
A stronger greenback
tends to push down dollar-denominated commodities prices. Crude oil for
November delivery slumped more than 5% to near $100 a barrel.
Also in metals futures, platinum for October delivery lost 3.9% to
$1,075 an ounce, while December palladium dropped 2.6% to $219.70 an
ounce. December silver dropped 3.5% to $13.03 an ounce, and December
copper tumbled 5.5% to $2.91 a pound.Capital Gold Group, gold group, gold, gold prices, gold news, gold coins, gold bullion, gold IRA, IRA gold
