Gold hits two-month high; copper drops to three-year low, off most in 12 years
NEW YORK (MarketWatch) -- Gold futures rallied Friday, with the benchmark contract surging to the highest in more than two months at one point, as investors sought safety amid unprecedented turmoil in the global financial system.
Meanwhile, concerns about economic prospects pushed copper futures down 14% to the lowest in nearly three years, marking the largest daily percentage drop in 12 years. The metal is set to end the week down 20%.
Gold for December delivery surged to $936.30, the highest intraday level since July 28. It pared some of its gains in recent trading as the U.S. dollar rose. Gold was last up $14.50, or 1.6%, at $901 an ounce on the Comex division of the New York Mercantile Exchange.
The precious metal has risen three out of four days this week and, including Friday's gains, it is set to end the week up $70, or 8%.
"The metal should continue to benefit from investor safe-haven demand," said James Moore, analyst at TheBullionDesk.com. "With today being Friday, we could see gold extend those gains as investors try and factor some safe-haven protection ahead of the weekend."
U.S. stock suffered another sharp day of losses Friday as the frozen credit markets and lack of faith in the financial system continue to hammer stocks around the globe. Stocks plunged on Thursday, with the Dow Jones Industrial Average down 678 points.
Worldwide stock markets also dropped on Friday, with the Nikkei 225 in Tokyo crushed to the tune of 9.6%. Renewed volatility gripped U.S. stocks as well. See Market Snapshot.
"Many investors view gold as the only lifeboat in the stormy sea," said Peter Fertig, analyst at Dresdner Kleinwort. He also warned that gold may return to follow weak fundamentals if the storm in financial markets calms.
Limiting gold's gains Friday was a rising U.S. dollar, which tends to add downward pressures to dollar-denominated gold prices.
The dollar index , which measures the currency against a trade-weighted basket of counterparts, was at 81.991, up from 81.397 Thursday. See Currencies.
Copper plunges
In other metals action, December copper slumped 32.9 cents, or 14%, to $2.07 a pound, the lowest since December 2005. Copper's percentage drop equated to the biggest since October 1996, according to data compiled by FactSet Research.
"Traders are having to revise down their expectations for commodities demand, and copper was one of the metals where prices are above marginal costs of production so in a way had the furthest to fall," said William Adams, an analyst at BaseMetals.com.
"Obviously, a lot of nervous liquidation selling is going on as people dash for cash," he added.
Elsewhere, platinum for January delivery fell 2.5% to $1,017.50 an ounce, while December palladium lost 3.8% to $197 an ounce. December silver sank 3.7% to $11.43 an ounce.
In spot trading, the London gold-fixing price -- used as a benchmark for gold for immediate delivery -- stood at $918 an ounce Friday morning, up $34.50 from Thursday afternoon.
On the equities side, the Amex Gold Bugs Index ) fell 4% to 272.57 points.
The SPDR Gold Trust slid 1.5% to $88.57, the iShares Gold Trust lost 2.7% to $88.53 and the iShares Silver Trust ETF fell 3.1% to $11.58. The Market Vectors-Gold Miners ETF dropped 5.1% to $28.70.
