Losses left behind as traders return to gold safe haven
Matt Whittaker

GOLD futures added to the previous session's gains overnight to erase much of last week's losses as financial market woes mounted.

But a bounce in the US dollar as well as sharply lower oil prices helped cap the metal's gains.

December gold rose $US22.50, or nearly 3 per cent, to $US787 an ounce on the Comex division of the New York Mercantile Exchange.

Gold futures found support as some of the market participants who had recently been exiting the metal moved back in to gold as a safe haven as Lehman Brothers filed for bankruptcy.

At the same time, Merrill Lynch agreed to be acquired by Bank of America and insurance giant American International Group was trying to raise capital.

Carlos Sanchez, precious-metals analyst with CPM Group, said participants were also moving into the US dollar as a safe haven, which dampened some of the support for gold.

Sterling Smith, vice-president with FuturesOne said that as the US dollar pared overnight losses linked to the Wall Street crisis, crude oil prices that fell below $US95 a barrel also kept gold from rising more.

Silver futures followed gold higher on safe-haven buying linked to the financial market storm.

Frank Lesh, broker and futures analyst with FuturePath Trading, said: "It's usually more of a follower than anything else."

Comex December silver rose US34 cents to settle at $US11.135 an ounce.

At the same time, economic implications from the financial market turmoil pushed platinum and palladium futures lower.

Nymex October platinum fell $US34.30 to settle at $US1176.20 an ounce while December palladium on the exchange declined $US4.80 to finish at $US238 an ounce.

One trader said: "Investors know the fundamentals in platinum and palladium are pretty poor right now."

Dow Jones Newswires