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Fri 19 Aug 2011 07:06 PM

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Gold jumps to record high as global equities suffer

Investors find refuge from second day of hefty losses in stock markets around the world

Gold jumps to record high as global equities suffer
Gold jumps to record high as global equities suffer
Gold jumps to record high as global equities suffer

Gold set a record
high on Friday on safe-haven buying but commodities rebounded after the
U.S. dollar plunged to a record low against Japan's currency on
speculation authorities will not halt the yen's surge.

European stocks closed lower on
fears major economies were entering recession and concerns about
regional bank funding. US stocks see-sawed near break-even, though, as
crude oil and other commodities rebounded on the dollar's slump.

Stocks
trading was volatile, with miners rising on higher commodity prices
while a 20 percent slide in Hewlett-Packard weighed on the Dow.

The dollar fell as low as 75.941 yen on trading platform EBS. It last traded at 76.360 yen, down 0.3 percent.

Currency
traders were emboldened by a Wall Street Journal report citing Japan's
top currency official as saying Japanese authorities do not plan to
intervene in the market often.

The
dollar's slump turned commodity markets, where crude oil prices rose
about 2 percent at one point. ICE Brent October crude rose $1.55 to
$108.54 a barrel.

The turn in
commodity prices lifted material and energy stocks, and helped turn Wall
Street from early sharp declines. The S&P materials index was up
0.2 percent.

"Commodities are
trading well with the weakness in the dollar," said Peter Boockvar,
equity strategist at Miller Tabak & Co in New York. "The euro
rallied to the high of the day and some bottom-pickers from yesterday's
sell-off have us higher."

Shortly
after 8pm UAE time, the Dow Jones industrial average was down 27.40 points, or
0.25 percent, at 10,963.18. The Standard & Poor's 500 Index was
down 0.20 point, or 0.02 percent, at 1,140.45. The Nasdaq Composite
Index rose 4.89 points, or 0.21 percent, at 2,385.32.

Gold
prices early in the session rallied almost 3 percent as investors
sought refuge from hefty losses in stocks on Thursday. Gold retraced
early record highs as European shares lifted from lows and the euro
recovered some lost ground.

Spot
gold jumped to record $1,877 an ounce and was last trading near $1,847,
still on track for its biggest one-month rise in nearly 12 years in
August.

"Any time in the current
environment you just need a little positive news (for the gold) market
to retrace quite a bit, before stabilizing and resuming its uptrend,"
said Credit Suisse analyst Tobias Merath. "There is clearly a stable
uptrend over many, many months."

European
shares flirted with two-year lows. The FTSEurofirst 300 index of top
European shares provisionally close down 1.7 percent lower at 909.79.
MSCI's all-country world stock index was off 1 percent.

US
Treasury yields inched up from lows last seen in at least 60 years on
as some investors took profits from Thursday's bond rally.

The
benchmark 10-year US Treasury note was down 8/32 in price to yield
2.09 percent. The yield at one point on Thursday fell to 1.97 percent.

Yields
have dropped almost a full percentage point on the 10-year note in
August as disappointing economic data, the Federal Reserve's low
interest rate policy and jitters over rising bank funding costs drove
investors to safe-haven bonds.

"At
the moment the market is just looking for relative safe havens," said
Mitsui Precious Metals analyst David Jollie. "You can see that in the
sell-offs across equity markets overnight. The strength of gold is the
other side of the coin from that."

The US dollar index slipped 0.6 percent to 73.835. The euro was up 0.6 percent at $1.4410.

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