FROM SCRATCH NEWSWIRE

SCAVENGING THE INTERNET

GOLD JUMPS 4% ON CHINA’S BAILOUT PACKAGE

Posted by Gilmour Poincaree on November 11, 2008

11 Nov 2008, 0155 hrs IST, REUTERS

LONDON: Gold rose more than 4% on Monday as dollar weakness and sharp gains across commodities Photo - WN - Periasamysharpened appetite for the precious metal, but retreated from highs as the dollar recovered some lost ground against the euro. A near $600-bn economic stimulus package announced by China on Sunday helped allay risk aversion and fuelled gains in equities as well as oil and base metals, carrying gold higher.

In London, spot gold touched an intraday peak of $767.80 an ounce, before easing back to $751.10/753.10 by 21:30 pm IST, against $735.95 in New York on Friday. US December gold futures rose more than 2% and were trading at $751.30, up $17.10.

In Mumbai, a major gold hub in India, the price of yellow metal hardened further on the back of stockists’ buying, supported by a rally in international markets. Standard and pure gold rose by Rs 70 and Rs 80 to Rs 11,785 and Rs 11,850 per 10 gm, respectively.

“The weakness in the US dollar… and the rise in crude oil and industrial metals reflect the announcement made by Chinese government on Sunday for a stimulus package of roughly $568 bn,” said Dresdner Kleinwort consultant Peter Fertig. “

This should spur investment in housing and infrastructure in the next two years, which will (lead to) stronger demand for energy and base metals. This is also a supportive factor for gold.”

China launched its stimulus plan on Sunday, pledging nearly $600 bn in extra spending by the end of 2010. Base metals jumped in response to the plan, with copper surging nearly 10%, nickel 13% and zinc around 7% following the news. All the metals have lost substantial ground in recent months.

At a G-20 meeting in Brazil, finance ministers and central bankers representing 90% of the world’s economy said they will take “all necessary measures” to normalise the financial markets and counter the backlash to the credit crisis.

The dollar weakened against the euro as risk appetite improved. A recovery in the stock markets prompted investors to move into higher-yielding currencies such as the euro and the yen.

A softer dollar tends to benefit gold, which is often bought as a hedge against weakness in the US currency. The currency’s recovery from lows against the euro later led gold to pare gains. Among other precious metals, silver tracked gold higher to a peak of $10.51 an ounce, up 5%, before settling back to $10.29/10.39 an ounce from $9.99.

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘THE ECONOMIC TIMES’ (India)

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

 
%d bloggers like this: