By Pham-Duy Nguyen
Sept. 26 (Bloomberg) -- Gold rose above $900 an ounce, heading for the second straight weekly gain, as talks on the $700 billion U.S. plan to ease the credit crunch stalled. Silver also gained.
Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, has jumped 18 percent in two weeks. The surge followed the collapse of Lehman Brothers Holdings Inc. and the U.S. takeover of American International Group Inc., Fannie Mae and Freddie Mac.
``Demand for gold will soar as people continue to seek out safe havens,'' said James Turk, the founder of Goldmoney.com, which held $368 million in silver and gold in storage for investors at the end of August. ``Gold is the safest haven of all in a period of financial stress and monetary uncertainty.''
Gold futures for December delivery rose $19.50, or 2.2 percent, to $901.50 an ounce at 10:34 a.m. on the Comex division of the New York Mercantile Exchange. The price is up 4.3 percent this week. Last week, the metal surged 13 percent, the most since October 1999.
Silver futures for December delivery climbed 19.5 cents, or 1.5 percent, to $13.47 an ounce.
Washington Mutual Bank became the latest casualty of the credit crunch last night as the Federal Deposit Insurance Corp. seized the assets and sold some to JPMorgan Chase & Co.
The Dow Jones Industrial Average dropped as much as 1.4 percent, and equities in Europe and Asia fell. The dollar dropped against a weighted basket of six major currencies.
Since the second quarter of 2007, banks worldwide have posted $522.1 billion in writedowns and losses related to investments in subprime mortgages.
``There is no agreement in Congress,'' said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. ``You've got a lot of systemic risk, and what you're seeing today is a renewed flight to quality. Gold is the ultimate quality asset.''
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.
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