Gold rises past $1,650 mark

AP News
Posted: Oct 06, 2011 4:14 PM
Gold rises past $1,650 mark

Gold closed above $1,650, easing concerns among traders that a major sell-off was underway.

Gold for December delivery rose $11.60 Thursday, or nearly 1 percent, to $1,653.20 an ounce. December silver gained $1.635, or 5.45 percent, to close at $32.005.

Many traders buy and sell gold based on market momentum. A sell-off last week pushed gold below $1,600 for the first time since July. Gold is down about 13 percent from its high of $1,891.90 in late August.

Some investors see a brighter future in gold, thanks to big stimulus measures from European central banks that promise to keep interest rates low. The European Central Bank offered Thursday to flood banks with any amount of one-year loans through 2013.

The Bank of England also said it would reopen a securities purchase program that essentially prints new money to boost Britain's stagnant economy, despite an inflation rate of 4.5 percent.

Taken together, the announcements bode well for gold, which tends to gain value when currencies become cheaper. Gold is often seen as safe investment when interest rates fall and currencies get cheaper to buy.

When gold closed above $1,650, it marked an important threshold for traders who buy and sell based on momentum in the market.

"That kind of changed the thinking for people who previously sold gold, who were thinking there might be a bigger sell-off than there was," said George Gero, senior vice president at RBC Wealth Management in New York.

Copper for December delivery gained 14.05 cents, or 4.5 percent, to end at $3.2465 a pound. January platinum rose $25.20, or 1.7 percent to finish at $1,508.10 an ounce and December palladium rose $28.45, or 5 percent, to $598.80 an ounce.

Oil prices rose. Benchmark oil jumped $2.91, or 3.7 percent, to end at $82.59 per barrel on the New York Mercantile Exchange.

Heating oil rose 8.45 cents to finish at $2.8611 per gallon, gasoline futures gained 11.68 cents to $2.686 per gallon and natural gas rose 2.8 cents to $3.598 per 1,000 cubic feet.

December wheat lost 9.25 cents to finish at $6.16 per bushel, December corn was unchanged at $6.055 per bushel and November soybeans were unchanged at $11.6375 per bushel.