Daily Gold Update

Source: MarketWatch

New York— Gold futures closed above $900 an ounce Tuesday as stocks and crude oil prices fell and investors, casting doubts on the new financial rescue plan unveiled by the Treasury Department, bought the metal as a safe-haven play against economic troubles. Also helping gold move higher was speculation that the $800 billion-plus U.S. stimulus plan may boost inflation in the longer term, increasing the metal's appeal as a hedge against rising prices. Gold for February delivery ended up $21.30, or 2.4%, at $913.70 an ounce on the Comex division of the New York Mercantile Exchange. The more active March contract rose to end at $914.20.

Gold has been swinging around the $900 mark over the past two weeks, as investors debated the consequences of economic stimulus plans adopted by the world's major economies. While some believe the plans can boost the economy, others think they raise the risk of inflation in the long term. "Even more pertinent is the real risk that while it may be another short-term panacea, it will likely lead to significant inflation or stagflation in the coming months," said Mark O'Byrne, executive director at Gold and Silver Investment. Gold's "near-term outlook will be dependent on [Tuesday's] U.S. stimulus package and bailout plans," said analysts at Action Economics. "Any uncertainty will boost gold's safe haven appeal, which has been a feature of trading over the last few weeks." See full story.