Gold prices jump after lawmakers reject bailout
By STEVENSON JACOBS, AP Business Writer
Tuesday, September 30, 2008 3:16 PM CDT
NEW YORK 9/29/08 - Gold prices bolted above $900 an ounce Monday after the legislative defeat of a U.S. financial bailout drove investors to pull money out of stocks and buy safe-haven assets.
Other commodities traded mostly lower as investors fretted that failure to eventually approve the rescue plan could deepen the economic crisis and dramatically curb demand for energy, building supplies and other goods.
House lawmakers rejected the $700 billion emergency measure by a vote of 228-205 after a week of intense bilateral talks, sending stocks and most commodities plunging. Investors scrambling for secure places to put money quickly turned to short-term Treasury bills and gold, which has long been considered a safe alternative investment during times of economic crisis.
“These are the very conditions that ought to yield a durable de-coupling in the metal from other assets and a subsequent rise in its value due to dwindling alternatives for investors to park their money in,” Jon Nadler, analyst with Kitco Bullion Dealers Montreal, said in a note.
Gold for December delivery jumped as high as $932 an ounce on the New York Mercantile Exchange before settling at $894.40, up $5.90. In aftermarket trading, prices jumped back up to $913 an ounce.
Other precious metals fell. December silver lost 47.8 cents to settle at $13.025 an ounce, while December copper fell 16.8 cents to settle at $2.9065 a pound.
In energy markets, oil prices plunged over $10 a barrel as traders bet that the bailout’s failure could prolong the economic downturn and drastically reduce energy demand.
Light, sweet crude for November delivery sank $10.52, or 10.1 percent, to settle at $96.36 on the Nymex, after earlier dropping as low as $95.04.
Crude has fallen almost $25, or 20 percent, in the past week amid intense talks to hammer out a deal for the $700 billion bailout.
In other Nymex trading, heating oil futures fell 22.89 cents to settle at $2.7885 a gallon, while gasoline futures dropped 26.81 to settle at $2.397 a gallon. Natural gas futures lost 40.7 cents to settle at $7.221 per 1,000 cubic feet.
Worries about what the rejection of the bailout means for the economy also weighed on grain prices.
Wheat for December delivery fell 48 cents to settle at $6.68 a bushel on the Chicago Board of Trade, while December corn lost 30 cents to settle at $5.13 a bushel. November soybeans fell 70 cents to settle at $10.94 a bushel.
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