Gold prices at record high, oil prices fall on economic worries

NEW YORK: Gold prices were driven to a record high Thursday as worries returned about sluggish economic growth.

Gold for December delivery added US$5.10 to settle at $1,273.80 an ounce, which was a record high. Earlier in the day, it traded as high as $1,279.50 an ounce.

It was the second time this week gold has set a record high, and some analysts believe the price could top $1,300 an ounce.

New government reports signaled snail-like job growth and uneven manufacturing activity.

In addition, the dollar grew weaker against other currencies. Combined, the developments prompted investors to buy gold, which is often seen as a safe place to park money.

"We've been bombarded with a lot of mixed signals," Matt Zeman, head trader at LaSalle Futures Group, said.

"In the end, housing and jobs still have not really turned the corner, so to speak. I think while people remain mildly optimistic, there still is a lot of investor angst out there."

The other development that boosted gold was the weaker dollar. That can make commodities, which are priced in dollars, more lucrative for foreign investors.

"As the euro made new highs, I saw gold making new highs and I think there's a direct correlation there," Lind-Waldock senior market strategist Rich Ilczyszyn said.

"Maybe it's the purchasing power of investors abroad."

Gold's rise gave a boost to silver, which closed at a high for the year. Most metals also settled higher.

Silver for December delivery rose 20 cents to settle at $20.771 an ounce.

December copper added 2.7 cents a pound to settle at $3.4935 a pound; October platinum rose $6.60 to $1,611.90 a pound while September palladium lost $10.20 to $546.95.

In other trading, wheat prices fell after the government said net exports fell from the previous week.

December wheat contracts lost 7.5 cents to settle at $7.1925 a bushel.

Corn prices extended their gains a day after reaching a two-year high because of uncertainty about production levels during this year's harvest season. December corn added 0.75 cent to settle at $4.96 a bushel.

November soybeans for November delivery fell 6.25 cents to settle at $10.3625 a bushel.

Crude prices dropped on Thursday after new government data signaled slower demand for oil and gas as the economy inches along in the slow lane.

Benchmark oil for October delivery lost $1.45 to settle at $74.57 a barrel on the New York Mercantile Exchange.

At the pump, motorists paid slightly more on average in part because of rising prices in the Midwest, where a pipeline has been closed for nearly a week, cutting off one supply of crude for refineries in the region.

The national average for a gallon of unleaded regular gasoline was $2.734 a gallon Thursday, according to AAA, Wright Express and Oil Price Information Service. That's up 5.1 cents from a week ago and 17.8 cents from a year ago.

Motorists in the Midwest, including Illinois and Wisconsin, were paying some of the highest prices in the country — between $2.868 a gallon and $3.526 a gallon.

Analysts expect prices to fall after Enbridge Energy Partners reopens the 670,000-barrel-a-day pipeline later this week. The line was closed last week after it sprang a leak in a Chicago suburb.

A series of mixed economic reports contributed to Thursday's dip in oil prices.

The Mid-Atlantic industrial production report contracted in September for the second straight month, although the Philadelphia Fed manufacturing index improved in August.

The Labor Department said first-time jobless benefits claims fell to a two-month low but still indicate sluggish economic growth.

PFGBest analyst Phil Flynn said there are concerns that demand may be softening as the slowest time of the year for energy products is at hand, between the busy summer driving season and ahead of the winter heating months.

Natural gas prices fell after the government said stockpiles held in underground storage in the lower 48 states increased last week. But they reversed course to end the session higher. Natural gas gained 6.7 cents to settle at $4.062 per 1,000 cubic feet.

Lind-Waldock senior market strategist Rich Ilczyszyn said he believes more traders are entering the market, hoping that the price of gas will start climbing.

"I really think this market is trying to find a bottom," he said.

Few traders think the two hurricanes in the Atlantic and one off Mexico's Gulf Coast will cause problems for oil and natural gas production and push up prices.

In other Nymex trading in October contracts, heating oil fell 3.36 cents to settle at $2.0990 a gallon and gasoline fell 3.78 cents to settle at $1.9247 a gallon.

In London, Brent crude for November delivery dropped 94 cents to settle at $78.48 a barrel on the ICE Futures exchange. - AP

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