Gold Futures Extend Gains on Demand for Haven; Silver Advances

By Pham-Duy Nguyen

Sept. 22 (Bloomberg) -- Gold rose, extending a rally after its biggest weekly gain in almost nine years, as investors shifted some assets into precious metals as a haven from market turmoil.

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, jumped 11 percent last week to 679.6 metric tons as volatility surged in financial markets. Over the weekend, the U.S. proposed a $700 billion bailout and Goldman Sachs Group Inc. and Morgan Stanley agreed to become more-regulated banks, sending the dollar lower against the euro. Gold reached a record $1,033.90 an ounce on March 17.

``Gold is the comfort blanket right now,'' said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. ``Even if the bailout gets pushed through, there's still a crisis of confidence. Pumping up the national debt is going to hurt the dollar, and gold should benefit.''

Gold futures for December delivery rose $19.50, or 2.3 percent, to $884.20 an ounce at 9:21 a.m. on the Comex division of the New York Mercantile Exchange. The metal gained 13 percent last week, the most since October 1999.

Silver futures for December delivery rose 59.5 cents, or 4.8 percent, to $13.07 an ounce on the Comex.

The historical volatility of the Standard & Poor's 500 Index, or the rate at which a price moves up and down, was 56 percent in the past 10 days.

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.