March 25, 2008
NEW YORK (AP) — Gold prices rebounded Tuesday, jumping more than $15 an ounce as a falling dollar and a big drop in consumer confidence enhanced the allure of precious metals as an alternative investment.
Other commodities traded broadly higher, with silver, copper and agriculture futures rising sharply. Crude oil futures fluctuated.
Gold last week fell the most in nearly two years amid a huge commodities sell-off that sent prices for everything from corn to crude oil sharply lower. Investors jumped back into the gold market Tuesday, spurred by new data showing consumer confidence fell to its lowest level in five years. The Conference Board report said fallout from the credit crisis, rising inflation and dim job prospects led to the decline, which was worse than expected. Weak consumer confidence often slows consumer buying, hurting the economy.
“The low consumer confidence number definitely helps gold because it’s seen as a safe haven and an alternative asset,” said Carlos Sanchez, analyst with CPM Group in New York. “The prospects of the economic situation and tightening of the credit fallout hasn’t disappeared, so we’ll likely see gold hold at these levels and probably go higher.”
Gold for April delivery added $16.10 to fetch $934.80 an ounce on the New York Mercantile Exchange. Gold last week fell more than 10 percent from its record high of $1,033.90, reached on March 17. The metal closed lower Monday for the third straight session.
Prior to last week’s sell-off, gold had been on a meteoric run, driven up by the tumbling dollar, record-high crude prices and fears of a U.S. recession. Investors often buy gold during times of economic uncertainty and rising inflation because the metal is known for holding its value.
Other precious metals also rose Tuesday, boosted after the greenback slipped further against the euro, which bought $1.5610.
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