Daily Gold Update

Source: MarketWatch

New York— Gold futures plummeted Friday as speculation that a Washington-engineered rescue plan could avert financial crisis reduced demand for gold as an investment haven. Gold for December delivery closed down $32.30, or 3.6%, at $864.70 on the Comex division of the New York Mercantile Exchange. The benchmark contract fell as much as $68.50 an ounce, or 7.6%, in electronic trading overnight, its biggest percentage drop in more than 25 years. Despite Friday's losses, gold ended the week up 13%, helped by the previous two sessions' rallies.

The main catalyst for the reversal following two days of rallying in gold was the Bush administration's sweeping plan for isolating financial institutions' troubled mortgage-backed assets. Congressional leaders promised quick work toward a legislative solution. But some analyst said government intervention could push up inflation levels and boost gold prices in the long run. "The federal government is printing money to absorb billions, maybe even trillions of dollars worth of derivatives to support the economy, and when you combine this with negative real interest rates, gold becomes a more attractive investment," said Frank Holmes, chief executive of U.S. Global Investors. See full story.