MW: Gold falls for 4th day on reduced safe-haven buying
Copper surges on hopes government plans will rescue financial markets
By Moming Zhou, MarketWatch
NEW YORK (MarketWatch) -- Gold futures fell Tuesday for a fourth straight session as investors continued to reduce safe-haven buying on hopes that the U.S. government's latest plan to inject capital into banks will rescue the ailing financial industry
Meanwhile, the benchmark copper contract jumped more than 4% on speculations that global plans to rescue the ailing financial industry will spark economic growth.
Gold for December delivery was last down $5.50, or 0.7%, at $837 an ounce on the Comex division of the New York Mercantile Exchange. Gold had fallen in the past three sessions. It closed at the lowest in more than a week on Monday.
The precious metal was edging lower "as reduced safe-haven demand was seen," said James Moore, analyst at TheBullionDesk.com. However, "the metal looks set to remain volatile in the coming session," he said, as investors watched the government's new rescue plan.
The Treasury Department outlined a plan to inject $250 billion of the government's $700 billion rescue plan directly into U.S. banks. See full story.
Gold rose to as high as $857.40 earlier as the U.S. dollar weakened, pushing dollar-denominated gold prices higher. The dollar pared losses in recent trading, with the dollar index trading almost flat.
Some analysts said that in the long term, the dollar is likely to fall as the rescue plans in the U.S. and Europe have the effect of applying upward pressure on inflation.
"The unintended consequence of the ongoing financial bailout will be a return of inflationary pressures to the commodity markets," wrote analyst Francisco Blanch at Merrill Lynch.
Investors tend to buy gold as a hedge against inflation. Demand for the precious metal also tends to rise as the dollar weakens.
In a research note released Monday, the analysts at Merrill predicted that gold prices will hit $1,500 an ounce and that oil will rise to $150 a barrel. They didn't specify when gold will hit the price target. See MarketWatch First Take.
In other metals, copper for December delivery rose 4.2% to $2.41. It surged 8.4% earlier to $2.51 a pound.
January platinum jumped 3.3% to $1,030.20 an ounce, December palladium gained 0.5% to $204.75 an ounce, and December silver rose 0.3% to $10.82 an ounce.
In spot trading, the London gold-fixing price -- used as a benchmark for gold for immediate delivery -- stood at $849.50 an ounce Tuesday morning local time, up $18 from Monday afternoon.
On the equities side, the Amex Gold Bugs Index ose 1.6% to 255.43 points.
The SPDR Gold Trust added 0.1% to $82.11, the iShares Gold Trust rose 0.5% to $82.23, while the iShares Silver Trust ose 1.1% to $10.72.
The Market Vectors-Gold Miners ETF climbed 2.2% to $27.37.
