Friday, Sept 19, 2008
Gold futures in New York fell the most in almost 28 years as central banks eased investor concern by pumping cash into global credit markets and U.S. officials said they were developing a plan to stop banks from failing.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke proposed moving troubled assets from the balance sheets of American financial companies into a new institution. U.K. and U.S. regulators cracked down on short sellers, sending stocks in Asia and Europe soaring and reducing the appeal of bullion as an alternative investment.
“The gold price has been extremely volatile in recent weeks, being pushed from pillar to post by the dramatic movements in foreign exchange, financial and equity markets,” David Moore, commodity strategist at Commonwealth Bank of Australia, said in a weekly report today.
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Gold futures for December dropped as much as $68.50, or 7.6 percent, to $828.50 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange, the biggest percentage decline since Nov. 7, 1980. In two days, the metal rose 15 percent, the most since U.S. futures debuted in 1975.
Gold for immediate delivery in London fell $20.77, or 2.4 percent, to $830.08 an ounce as of 9:46 a.m. local time.
The dollar’s first increase against the euro in three days also reduced gold’s attraction as an alternative investment to the U.S. currency. Gold has had a correlation of 0.68 to the euro-dollar exchange rate this year, up from 0.58 last year, Bloomberg data show. A figure of 1 would mean they move in lockstep.