GOLD hit 1009 $Gold pares gains after hitting record high of $1,009
By Polya Lesova, MarketWatch
Last update: 1:02 p.m. EDT March 14, 2008Print E-mail RSS Disable Live Quotes
NEW YORK (MarketWatch) -- Gold futures pared some gains Friday after surging to a record high of $1,009 an ounce earlier, as investors sought a safe haven following news of a bailout of troubled investment bank Bear Stearns.
Gold for April delivery gained $4.70 at $998.50 an ounce on the New York Mercantile Exchange. Earlier in the session, gold hit a record of $1,009.
"The Bear [Stearns] news seems to be blowing this market up through $1,000," said Zachary Oxman, a senior trader at Wisdom Financial.
"Bear is the first, who's next? That question is haunting investors right now and they are looking for a flight to quality," Oxman said.
"Bear is the first, who's next? That question is haunting investors right now and they are looking for a flight to quality."
— Zachary Oxman, Wisdom Financial
Bear Stearns (BSC:The Bear Stearns Companies Inc
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1:14pm 03/14/2008
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BSC 33.75, -23.25, -40.8%) said Friday that it got short-term financing from the Federal Reserve and J.P. Morgan Chase (JPM:JPM
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JPM, , ) after the brokerage firm's liquidity "deteriorated significantly" during the past 24 hours.
J.P. Morgan said it's providing Bear with secured funding for up to 28 days, in conjunction with the Federal Reserve Bank of New York. Read full story.
The dollar trimmed losses but remained under pressure Friday after touching new lows against the euro and Swiss franc, undermined by cool inflation data and weakness on Wall Street as the market digests news of Bear Stearns' bailout.
The dollar index, which tracks the performance of the greenback against a basket of currencies, edged up 0.05% at 71.88. See Currencies.
"Expansion of the monetary supply continues at an aggressive pace and simultaneously fear and panic are starting to emerge, and confidence in the system is deteriorating quickly," said Peter Spina, an analyst at GoldSeek.com.
"As it deteriorates further, a greater awakening will occur and the move into gold will turn into a rush," Spina said. "In a year from now, I suspect gold at $1,000 and silver at $20 will look cheap to us"
On Thursday, gold futures soared to a high of $1,001.50 an ounce, surpassing the $1,000 an ounce level for the first time.
In economic news Friday, the Labor Departments reported that U.S. consumer inflation moderated in February, opening the door for the Federal Reserve to keep cutting interest rates to support flagging economic growth. See Economic Report.
The consumer price index was flat in February. Wall Street economists had expected a 0.2% increase. In addition, core prices -- which exclude volatile food and energy costs -- were also unchanged, below the 0.2% gain in retail-level inflation that economists surveyed by MarketWatch had been looking for.
Separately, U.S. consumer sentiment slipped again in March, but not as much as expected, according to media reports Friday.
The University of Michigan/Reuters index tracking consumer sentiment dipped to 70.5 in March from 70.8 in February. The March reading came in above the 69.0 expected by economists. Still, it was the lowest in 16 years.
Crude-oil futures dropped to trade back below $110 a barrel, as the dollar rose against major currencies following the release of better-than-expected U.S. inflation data. See Futures Movers.
"Over the past two weeks both gold and oil have been strengthening as markets were falling and as news of the credit crisis is getting worse," said Martin Hennecke, adviser with Tyche Group in Hong Kong.
"There is a shift in pattern where people are really trying to shelter now in commodities as a way out of the credit crisis," he said.
Also on Nymex, May copper surged 6 cents at $3.88 a pound and May silver gained 41 cents at $20.84 an ounce.
April platinum rose $11.20 at $2,108.70 an ounce, while June palladium fell $1.10 to $514.80 an ounce.
The Amex Gold Bugs Index (HUI:HUI
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HUI, , ) rose 1.2% at 513.74 points.
As for the sector's exchange-traded funds, the StreetTracks Gold Trust ETF (GLD:GLD
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GLD, , ) gained 0.9% at $99.18, the iShares Silver Trust ETF (SLV:SLV
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SLV, , ) rose 1.2% at $206.40 and the Market Vectors-Gold Miners ETF (GDX:GDX
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GDX, , ) edged up 0.6% at $56.36.
Polya Lesova is a MarketWatch reporter based in New York.