Gold Finds Favor Amid Currency Turmoil
Sep. 16, 1992
Undated (AP) _ Gold prices rose strongly Wednesday as investors alarmed by turmoil in world currency markets sought the traditional safe haven of precious metals.
On other commodity markets, grain and soybean futures were mixed; energy futures were mixed; and livestock and meat futures retreated.
Gold for October delivery climbed $3.30 to $350.20 an ounce on New York's Commodity Exchange.
September silver deliveries rose 1.5 cents to $3.821 an ounce on the Commodity Exchange; October platinum rose $2.50 to $367.40 an ounce on the New York Mercantile Exchange.
Gold and other precious metals are perceived as safe investments in times of global turmoil because they tend to hold their value regardless of changes in foreign exchange rates.
Uncertainty reigned in the international money market Wednesday as Britain frantically tried to stabilize the weakening pound by first raising, then dropping interest rates and suspending exchange-rate links with other European currencies.
''There's an old saying that gold is an international currency; you can take it to any country and exchange it for the local currency,'' said Martin Reichenberg, manager of trading services for Pegasus Econometric Group in Hoboken, N.J.
''It's recognizable anywhere, you can carry it anywhere and you won't see a devaluation overnight.''
But analysts said the money that poured into the gold market this week likely will drain out again after Sunday's French vote on a plan to create a single European currency by the end of the decade.
''This is hot money being temporarily parked in the gold market,'' said George Milling-Stanley, precious metals analyst with Shearson Lehman Brothers Inc. in New York.
''Once the picture is clearer, I think people will have a much clearer idea of what they want to be doing in those markets,'' he said.
Wednesday's gold rally began in Europe and continued when commodity funds that had previously bet on falling gold prices reversed those positions on the New York futures market, Milling-Stanley said.
Wheat futures advanced on the Chicago Board of Trade amid perceptions of improved prospects for export sales of U.S. grain to Russia and other foreign buyers.
Corn and soybean futures finished lower but above the day's lows after some midday weather forecasts contained a possibility of frost in the Midwest early next week.
Wheat for delivery in September rose 4 1/2 cents to $3.27 1/2 a bushel; September corn slipped 1/2 cent to $2.25 3/4 a bushel; September oats rose 1 3/4 cents to $1.47 1/2 a bushel; September soybeans dropped 2 cents to $5.59 1/2 a bushel.
Crude oil futures rose on the New York Mercantile Exchange as OPEC ministers meeting in Geneva searched for a formula that would allow crude prices to rise as much as $2 a barrel during the winter months.
Petroleum product prices finished mixed and natural gas rose, extending Tuesday's gain.
Light sweet crude oil for October delivery climbed 21 cents to $22.39 a barrel; October heating oil slipped 0.5 cent to 63.04 cents a gallon; October unleaded gasoline rose 0.6 cent to 60.89 cents a gallon; October natural gas rose 2.5 cents to $2.269 per 1,000 cubic feet.
Livestock and meat futures ended mostly lower on the Chicago Mercantile Exchange, pressured by profit-taking in the cattle pits and expectations for lower cash hog prices on Thursday.
Live cattle for October delivery fell .20 cent to 75.42 cents a pound; September feeder cattle rose .03 cent to 84.45 cents a pound; October live hogs fell .13 cent to 40.62 cents a pound; February frozen pork bellies fell .22 cent to 40.60 cents a pound.