Gold Drops for Second Day as Investors Seek Cash Amid Turmoil

By Glenys Sim

Sept. 24 (Bloomberg) -- Gold fell for a second day in Asia to trade under $900 an ounce, as investors sought to raise cash after stocks tumbled.

Bullion dropped after U.S. shares declined in the worst two- day slump in six years amid concern Congress will hold up a $700 billion bank rescue that Federal Reserve Chairman Ben S. Bernanke said is critical to preventing a recession.

``Gold went up nearly $60 in the last three sessions so there's bound to be a bit of profit-taking, especially when everything else is losing money,'' said Lin Yuhui, research manager at China International Futures Co.

Gold for immediate delivery fell as much as 1.5 percent to $878.45 an ounce, and traded at $883.50 an ounce at 1:56 p.m. in Singapore. Silver for immediate delivery was down 0.9 percent at $13.1725 an ounce.

``Investors are still trying to decide which way the economy is headed and while weighing their options, for a lot of them at this moment, cash is king,'' said Lin.

The precious metal has rallied 17 percent since Sept. 11 after bank failures encouraged purchases of commodities as a haven from financial turmoil. Still, skepticism that the bailout plan would bolster economic growth in the U.S. weighed on oil and copper prices.

``No one knows what is safe in these volatile times,'' Lin said. ``There's a growing feeling that even commodities don't cut it as a haven anymore.''

Gold for December delivery lost 0.3 percent to $889 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

Gold for June delivery on the Tokyo Commodity Exchange rose 0.6 percent 3,005 yen a gram ($881 an ounce).

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net