Gold Climbs as Crude Oil Advances From Low, Haven Appeal Gains

By Madelene Pearson and Glenys Sim

Sept. 17 (Bloomberg) -- Gold climbed as a gain in crude oil boosted its appeal as an inflation hedge and investors bought the metal as a store of value amid the global economic turmoil.

Oil rose from a seven-month low after the U.S. government pledged up to $85 billion to rescue American International Group Inc. Precious metals fell yesterday as investors sold commodities to raise cash and cover losses in other markets after the credit crisis led to the collapse of Lehman Brothers Holdings Inc.

``The ill winds of an uncertain U.S. equity market and a choppy U.S. dollar could limit the selling,'' said Mark Pervan, analyst at Australia and New Zealand Banking Group Ltd., said in a report today. Still, ``the U.S. Fed's decision to keep interest rates on hold and forecast lower oil prices will take key support mechanisms out of trade positions.''

Gold for immediate delivery gained as much as 0.8 percent to $785.72 an ounce, and was at $780.75 at 1:46 p.m. Singapore time. Silver for immediate delivery rose 2 percent to $10.650 an ounce.


Crude oil for October delivery rose 3.2 percent to $94.10 a barrel at 1:58 p.m. Singapore time in after-hours trading in New York. The futures declined more than $10 a barrel, or 9.9 percent, in the past two days on concern that financial market disruptions may weaken the global economy and cut fuel consumption.

Bullion also gained as some investors bought the metal as a haven, said Toby Hassall, an analyst at Commodity Warrants Australia. Investors often consider gold a store of value during times of financial uncertainty.

``In history it's always been a place to park your money when things are uncertain,'' Hassall said by phone from Sydney. ``We're probably seeing a bit of flight to safety.''

Futures for December delivery rose 0.5 percent to $784.60 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 1:47 p.m. Singapore time.

Gold for August delivery traded in Tokyo was up 2.6 percent at 2,661 yen a gram ($780 an ounce) at the same time, while Shanghai gold for December delivery was 0.8 percent higher at 174.08 yuan a gram ($791 an ounce).

To contact the reporters on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net