Gold rebounds as economic fears resurface

AP News
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Posted: Aug 25, 2011 3:48 PM
Gold rebounds as economic fears resurface

Gold prices rebounded Thursday as more U.S. workers sought unemployment benefits and concerns about Europe's debt problems took back the spotlight.

Gold rose $5.90 to finish at $1,763.20 an ounce after falling $134.60 in the past two days. It was the latest in a string of price swing in August as investors trade gold based the economic news of the day. The price of gold is up 8.7 percent this month.

The Labor Department said jobless applications rose 5,000 to 417,000 last week, the highest level in a month. Although the figure was inflated by thousands of Verizon workers who were on strike, it still was more than the 375,000 level that economists say is needed to indicate sustainable job growth.

In Europe, debate continued about the best way to resolve debt problems in several countries. Germany's main stock index, the DAX, plummeted 4 percent within 20 minutes before paring its losses and closing down 1.7 percent.

The sudden move in the financial market rattled investors and prompted some to buy gold, which is considered a stable investment during economic turmoil.

With the weekend ahead, investors want to solidify their positions in case there is additional news from Europe or Libya that could affect prices next week, Telvent DTN analyst Darin Newsom said.

"There's still this undercurrent of concern over the economic situation domestically and globally" which should support gold prices, he said.

MF Global senior market strategist Phillip Streible said gold prices are also being pushed higher by central banks around the world buying gold to diversify their holdings. He and other analysts expect gold to remain volatile until there is a better idea of where the global economy is headed.

In other commodities trading, gasoline futures rose as investors worried about the impact that Hurricane Irene could have on refineries and shipping into New York, BNP Paribas Commodity Futures analyst Tom Bentz said.

The hurricane could hit North Carolina's Outer Banks Saturday afternoon with winds around 115 mph. It is expected to sweep up the East Coast, dumping rain from Virginia to New York City. Refineries in Delaware, New Jersey, Pennsylvania and Virginia produce nearly 8 percent of the country's gasoline and diesel fuel.

Gasoline futures rose 4.59 cents to finish at $2.8017 per gallon on the New York Mercantile Exchange.

In other Nymex trading, September benchmark crude rose 14 cents to end at $85.30 per barrel, heating oil rose 2.42 cents to $2.9932 per gallon and natural gas increased 0.9 cent to $3.931 per 1,000 cubic feet.

Other commodities were mixed.

Silver for September delivery rose $1.583 to finish at $40.745 an ounce, September copper rose 8.1 cents to $4.079 per pound, October platinum fell $3.90 to $1,822.40 an ounce and September palladium rose $8 to $751.15 per ounce.

December wheat rose 10.5 cents to finish at $7.8775 a bushel, December corn increased 0.5 cent to $7.435 a bushel and November soybeans fell 0.75 cent to $13.9275 a bushel.