RTRS: Gold jumps 3 percent as investors rush to safety
By Humeyra Pamuk
LONDON (Reuters) - Gold rallied more than 3 percent on Wednesday as investors rushed to buy safer assets while the worst financial crisis in nearly 80 years battered stock markets across the globe.
World stocks dropped to four-year lows while European shares plummeted more than 7 percent to five-year lows as rescue packages failed to calm down market jitters around the globe.
Silver jumped nearly 5 percent while palladium rallied 3 percent, tracking gains in gold. One exception was platinum, which tumbled by as much as 6 percent at one point, due to poor demand prospects.
Gold was trading at $911.35 an ounce, up $24.75 from 886.60 an ounce late in New York on Tuesday, after jumping to $915.30 an ounce, its highest since September 29.
"It is absolute fear out there right now," said Standard Bank analyst Walter de Wet. "And it is driving all of the assets down but safer assets like gold is rising."
Gold has gained 25 percent since mid-September as a deepening financial crisis, spreading to European banks after U.S. has prompted investors to sell their investments in equity markets and seek refuge in safer assets.
It is still below a lifetime high of $1,030.80 an ounce struck in March.
Physical demand for gold also has shot up, analysts say, as the banks being taken over by governments or sold to their rivals prompted consumers to invest in gold coins.
The U.S. Mint said on Tuesday that because of the extreme fluctuating market conditions for 2008, as well as current market conditions, gold and silver demand is "unprecedented".
"There is a lot of tightness in the market," said Jeremy East, global head of metals trading at Standard Chartered . "It may well continue -- there is a big demand for physical gold and for ETFs," he said.
Holdings in the world's largest gold-backed ETF, the SPDR Gold Trust, rose to 745.22 tonnes as of October 8 from 744.54 tonne as of October 7..
"This is a good time to buy gold. Stock prices are not so good. ETF is a good support for gold prices. This is the actual investment buying," said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.
Oil prices fell $4 as the continuation of the global financial crisis heightened the anticipated decline in crude oil demand while the dollar fell to a fresh 6-month low against the yen.
Platinum was trading at $990.00 an ounce, down from $1,004.00 an ounce in New York on Tuesday after falling as low as $940 an ounce.
The metal has been hit by heavy selling on fears of falling demand for autocatalysts. It tumbled to $920 an ounce on Monday, its lowest level since November 2005, on the back of poor car sales, especially in the United States.
Prices are well below a lifetime high of $2,290 an ounce struck in March.
New York gold futures jumped more than 3 percent to $916.4 an ounce.
Spot silver jumped nearly 5 percent and was at $11.90/11.97 versus $11.51, while spot palladium was at $199/203 versus $194.00 late in New York on Tuesday.
