Gold prices soar after AIG bailout, dollar drop
Stevenson Jacobs

NEW YORK (AP) — Gold prices soared Wednesday, jumping more than $60 an ounce as mounting credit market turmoil prodded jittery investors to pull money out of equities and into safe-haven assets.
Gold's huge rally — prices shot up over 8 percent — came as the government moved overnight to rescue troubled insurer American International Group Inc. with an $85 million bailout loan. The Federal Reserve stepped in after AIG, teetering on collapse from losses tied to the subprime crisis and the credit crisis, failed to find adequate capital in the private sector.

Fearing more tightening of credit markets, investors reacted swiftly and began dumping stocks and socking money into gold, silver and other safe-haven commodities. Gold is especially attractive during times of crisis because the metal is known for holding its value.

Gold for December delivery jumped $64.50, or 8.25 percent, to $845 an ounce on the New York Mercantile Exchange, its highest trading level since Aug. 29. Prior to the rally, gold had fallen 25 percent since surging to record levels above $1,000 an ounce in March.

"The same market participants who got out of gold are coming back in now. This is the start of an upward move," said Carlos Sanchez, analyst with CPM Group in New York, who predicted prices could climb back to $1,000 by year's end.

Silver prices also jumped. The December contract soared 88.8 cents to $11.405 an ounce. December copper, however, fell 5.15 cents to $3.0375 a pound.

In other commodities, crude oil rebounded after the AIG bailout eased worries that the insurance giant and other financial firms would liquidate commodities holdings to raise cash.

Light, sweet crude for October delivery rose $2.01 to $93.16 a barrel on the Nymex.

In other Nymex trading, heating oil futures fell about half a penny to $2.7145 a gallon, while gasoline futures lost 2.34 cents to $2.3774 a gallon.

In agriculture markets, most grain prices traded higher.

Corn for December delivery rose 5.25 cents to $5.375 a bushel on the Chicago Board of Trade, while

December wheat added 20.75 cents to $7.1075 a bushel.

November soybeans fell 2 cents to $11.22 a bushel.

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