MW: Gold surges 3% as stock rallies boost confidence
By Moming Zhou, MarketWatch
EW YORK (MarketWatch) -- Gold futures rallied more than 3% Wednesday, gaining the most in more than three weeks, as rallies in global stock markets and a possible interest-rate cut in the U.S. pushed prices for commodities broadly higher.
Also in metals, the benchmark silver contract jumped more than 10%. Copper, a metal seen as an economic barometer, moved up 7%, rebounding for a third day from its three-year low.
Gold for December delivery rose $24 to $764.50 an ounce on the Comex division of the New York Mercantile Exchange, rallying 3.2% -- the biggest daily percentage gain since Oct. 2.
"Recent movements in both the equity and currency markets suggest some risk appetite is beginning the return," said TheBullionDesk.com analyst James Moore in a note to clients.
"This, coupled with the fact gold is considerably lower than at the start of the year and investors may look to further diversify their asset holdings, may allow gold to begin recouping some of its losses," he wrote.
Gold's gains coincided with broad rallies in other commodities, including a surge of more than 6% for crude-oil futures. See Futures Movers.
The Reuters/Jefferies CRB Index , a benchmark gauging the prices of major commodities, rose by 1.5%.
Also helping boost commodities were rallies in global stocks. Fallowing a sharp rise in U.S. stocks Tuesday, markets made major gains in Asia and Europe on Wednesday.
Meanwhile, the U.S. dollar fell against the euro ahead of the Federal Reserve's rate decision. A weaker dollar tends to increase investors' demand for gold as an alternative investment.
The Fed is expected to cut its key interest rate by half a percentage point, to 1%. The decision is due at 2:15 p.m. Eastern.
In gold spot trading, the London gold-fixing price -- used as a benchmark for gold for immediate delivery -- stood at $749.25 an ounce Wednesday morning local time, up $18.75 from Tuesday afternoon.
In exchange-traded funds, gold in the SPDR Gold Trust , the largest gold ETF, stood at 749.21 tons Tuesday, unchanged from Friday, according to the latest data from the fund. Gold held by the fund hit a record high of 770.64 tons on Oct. 10.
Gold futures came under heavy selling pressure in recent weeks, with the benchmark contract falling in 10 out of the past 14 sessions since it closed above $900 on Oct. 8. It is now more than $90, or 10%, lower than at the beginning of 2008.
In other early trading, December copper gained 13.65 cents, or 7.3%, to $1.995 a pound, while December silver jumped 11% to $9.765 an ounce. December palladium rose 4% to $191.10 an ounce, with January platinum ahead 2% to $825 an ounce.
