MW: Gold rises as falling stocks fuel safe-haven buying
Gold futures rose above $930 an ounce Monday as tumbling stocks and the possible bankruptcy of General Motors heightened the metal's attraction as an asset that holds value in tough times, but a stronger dollar capped gold's gains.
Gold for April delivery was last up $7.40, or 0.8%, at $930.60 an ounce on the Comex division of the New York Mercantile Exchange.
June gold, which holds the most open interest, or the number of outstanding total contracts, rose $5.30, or 0.5%, to $930.60 an ounce.
Gold's gains came amid slumps in global stock markets after the Obama administration forced the resignation of General Motors Corp. CEO Rick Wagner and rejected restructuring plans offered by GM and Chrysler.
The ousting of Wagoner came as Obama administration officials said the government will give GM and fellow automakers Chrysler LLC enough capital to work with stakeholders to craft more aggressive strategies but warned that a "quick and surgical" bankruptcy may be each company's best chance for survival.
Gloomy economic news fueled safe-haven buying for gold. Gold holdings in SPDR Gold Shares , the biggest gold ETF, rose to a new record high of 1,127.44 tons Friday, up 2.45 tons from the previous day, according to the latest data from the fund.
"Gold rises as investors seek safety in the metal," said Mark O'Byren, executive director at Gold and Silver Investments. "Investment demand is set to remain robust as savers internationally are punished by miniscule interest rates and negative real interest rates."
Wagoner resigns
At a meeting on Friday in Washington, the Obama administration officials requested GM's Wagoner to resign, according to Wagoner's statement. Wagoner's departure is part of the restructuring agreement between GM and the U.S. government. See full story.
The news helped send stocks broadly lower in Asia and Europe and the dollar higher against its major rivals. U.S. stocks also fell broadly. Meanwhile, crude-oil futures lost more than 3%. See Currencies.
The dollar's gain also indicated that the G20 meeting won't produce an agreement on additional fiscal stimulus measures, analysts said.
"We remain bullish on the dollar and believe that aggressive U.S, policy actions taken so far will help the U.S. economy and the dollar outperform," wrote Marc Chandler, currency strategist at Brown Brothers Harriman.
In currencies trading, the dollar rose against the euro and the British pound. A stronger greenback tends to push down dollar-denominated gold prices, though this pattern hasn't always held true in gold's recent trading.
A stronger dollar could add downward pressures on gold prices this week, said James Moore, a precious metals analyst at TheBullionDesk.
In other metals trading Monday, silver for May delivery fell 1.7% to $13.035 an ounce, April platinum lost 0.5% to $1,121.90 an ounce, June palladium dropped 4.3% to $214 an ounce and May copper slid 3.7% to $1.768 a pound
