NEW YORK Nov 13: New York gold futures jumped on Monday after a commercial airliner crashed in the borough of Queens, in a reflexive flight to hard assets by traders still jittery two months after the Sept 11, attack on Manhattan.
But the rally lost momentum after federal officials said early information suggested the crash of the American Airlines Airbus A-300 jet with 255 people aboard was an accident rather than a premediated attack.
The plane went down shortly after take-off from John F. Kennedy International Airport and was on route to the Dominican Republic.
COMEX December gold ended up 90 cents at $278.60 an ounce, having touched $282.50 in the morning after the story broke, the highest level for the contract since Oct. 18.
I think as this plane crash looked to be more and more an accident, rather than terrorism, the gold market sold off, said Donald Eckert, global bullion risk manager at J.P. Morgan Chase. It looks like all the markets have given back their immediate reaction.
Spot gold closed at $278.00/8.50, up compared with the close on Friday at $277.20/70 but off Monday’s afternoon fix in London at $280.
It was not immediately known what caused the plane to go down in a populated neighborhood. But the memory was still fresh of the collapse of the Twin Towers of the World Trade Center after hijackers rammed two planes into them.
The Pentagon was damaged by a third jet while another crashed in a field in Pennsylvania, leaving a total of 4,500 dead in the worst attack on American soil.
Traditionally, gold has been seen as a safe place to stash money during times of political and financial market turmoil.
December gold jumped to $300 an ounce on Sept 14, in the first trading after the September attacks. But its safe-haven allure wore off in the two months since Manhattan’s financial district landmark was laid to ruins.
On Wall Street, the main stock indexes tumbled. But by mid afternoon the Dow Jones industrial average had cut a loss of almost 200 points to just 70 and the Nasdaq was up.
Stocks of gold and precious metals producers bucked the weakness. The XAU Gold and Silver Mining Equity Index on the Philadelphia Stock exchange rose as much as 1.42 points, or 2.6 per cent, to 56.14 before the rally tapered off.
Right now it’s a one-horse rally and a one-horse sell-off. We’re right back almost, at settlement, to where we were before the news came out, he said.
December silver rose 3.8 cents to $4.118 an ounce. It traded from $4.08 to $4.21, its highest price in 10 days.—Reuters