Gold Futures Surge Above $900, Silver Rises on Demand for Haven

By Pham-Duy Nguyen

Oct. 8 (Bloomberg) -- Gold surged above $900 an ounce on speculation that moves by central banks to ease the global credit crunch won't revive financial markets, boosting demand for the precious metal as a haven. Silver also gained.

The Federal Reserve, the European Central Bank and four other central banks lowered benchmark lending rates in the face of the worst financial crisis since the Great Depression. Equities in Asia and Europe fell, and U.S. stock-index futures still headed lower. Gold is up 9.5 percent this week.

``The rate cuts are not enough to restore confidence,'' said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. ``All they did was put another Band-Aid on. You still have systemic fear. People who were afraid of the banking system are still massively scared. Gold is a storehouse of value when all the world's assets have declined.''

Gold futures for December delivery rose $30.20, or 3.4 percent, to $912.20 an ounce at 9:36 a.m. on the Comex division of the New York Mercantile Exchange. Earlier, the metal reached $924.90. The price rallied to a record $1,033.90 in March after the Fed slashed borrowing costs over seven months.

Silver futures for December delivery jumped 48 cents, or 4.2 percent, to $11.86 an ounce. Before today, the price dropped 24 percent this year.

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