Daily Gold Update

Source: MarketWatch

San Francisco— Gold futures declined Friday, ending the week with a loss of 6.2%, after the U.S. House of Representatives approved a revised version of the $700 billion plan to bail out the ailing financial sector. Investors are expecting the financial industry to stabilize with the help of the rescue plan, reducing demand for gold as a safe haven, analysts said. Some investors bought gold earlier as an insurance policy should the rescue package have not passed, and those players are now withdrawing from the market. Gold for December delivery closed down $11.10, or 1.3%, at $833.20 an ounce on the Comex division of the New York Mercantile Exchange. The benchmark gold contract ended the week down $55.30.

"Everybody has their fingers crossed that the plan is going to restore some trust in the financial market and jump-start the real economy again," said Jeffrey Nichols, managing director at American Precious Metals Advisors. In their first reaction Thursday to the passage of the plan in the Senate, investors pushed gold down by nearly 5% to its lowest level in two weeks. Despite recent heavy selling pressure, some analysts said they remain optimistic that prices will rebound. "The way the government is dealing with [the financial industry] is simply throwing money into the financial sector," said Nichols. "In the long run all this is going to translate into higher inflation, which is bullish for gold." Investors tend to seek value in gold when the economy faces inflation and the currency depreciates. See full story.