Gold, Silver Gain on Demand for Alternative to U.S. Assets

By Pham-Duy Nguyen

Sept. 5 (Bloomberg) -- Gold rose the most in two weeks after a report showed the U.S. unemployment rate climbed to a five-year high, reviving demand for the precious metal as an alternative to U.S. assets. Silver also gained.

U.S. stock futures extended their decline for a fourth session and the dollar pared gains against the euro. Some investors buy gold to hedge against turmoil in financial markets. Gold reached a record on March 17, while the dollar and the Standard & Poor's 500 Index in July headed to the lowest levels this year.

``The unemployment rate is a scary number to people,'' said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. ``The dollar is losing strength. Equities are losing value. With no better choices to put money into, we're going to see renewed interest in some commodities, and gold is going to benefit.''

Gold futures for December delivery rose $15.20, or 1.9 percent, to $818.40 an ounce at 9:39 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest percentage gain for a most-active contract since Aug. 21.

Silver futures for December delivery climbed 6 cents, or 0.5 percent, to $13 an ounce.

Before today, silver fell 13 percent this year, while gold dropped 4.2 percent.

The U.S. jobless rate in August jumped to 6.1 percent, matching the level of September 2003, from 5.7 percent the prior month.

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