Gold Rises on Demand for Haven; Credit Crisis Spreads to Europe

By Pham-Duy Nguyen

Oct. 6 (Bloomberg) -- Gold rose the most in two weeks on demand for a haven as the credit crisis spread in Europe. Silver declined.

Equities in the U.K. headed for the lowest close in almost four years. BNP Paribas SA said it will buy Fortis's units in Belgium and Luxembourg after government intervention failed, and Germany is planning a rescue of the nation's second-biggest commercial-property lender. Gold dropped 6.2 percent last week after the U.S. passed a $700 billion package to bail out banks.

``This is truly a financial panic,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. ``It's obvious safe-haven buying for gold. One bank after another is going under in Europe. And what's scaring people is that they don't have all the safeguards that we do in this country.''

Gold futures for December delivery rose $30.70, or 3.7 percent, to $863.90 an ounce at 9:11 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest percentage gain since Sept. 22. The metal reached a record $1,033.90 on March 17.

Silver futures for December delivery fell 5 cents, or 0.4 percent, to $11.275 an ounce. The metal tumbled 16 percent last week.

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