News // Metal market
Gains in Gold Reverse
18 September 2008 , 10:54681
After an earlier rise of 3% to $892.10, gold reversed earlier gains to fall below $860 per ounce on Thursday, down about 0.4 percent from the previous day, as buying ran out of steam. On Wednesday, gold made its biggest ever one-day rise in absolute dollar terms, when buyers flocked to the precious metal as a safe haven asset, and as a hedge against falling stocks.
Buying by Japanese investors had helped gold touch its highest level since Aug. 5 after distant gold futures contracts on the Tokyo Commodity Exchange rose by their daily limit, forcing them to buy cash gold, traders said.
"It was a run from paper assets to gold," said Hitoshi Inagawa, senior manager at Tokyo-based broker Yutaka Shoji Co, referring to gold's surge in New York.
"But somehow I didn't feel similar zeal in Asia. Gold had extended gains (until recently), but that was more or less led by buying in the futures markets, which bolstered the price of bullion," he said.
Gold received little help from the dollar, which was stabilising against major currencies, and a halt in an oil price rally
Spot gold stood at $859.40 as of 0341 GMT, down 0.4 percent from the notional close in New York on Wednesday, when it surged more than 10 percent or nearly $90, exceeding the previous biggest one-day gain in 1980.
COMEX gold held onto gains after rising 9 percent on Wednesday. The most active December contract was trading up $11.5 or 1.4 percent at $862.0 from the New York settlement.
Benchmark TOCOM gold futures for August 2009 delivery jumped by the daily 150 yen limit to 2,808 yen per gram. It rose 5.6 percent from Wednesday.
The spot October contract, which is not bound to the daily limit, was up 217 yen at 2,866 yen.
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