Gold climbs as safe haven
Fears of prolonger Iraq war send investors back into precious metal.
March 25, 2003: 5:57 AM EST
LONDON (Reuters) - Safe-haven gold gained Tuesday as fears of a prolonged, messy war in Iraq rocked financial markets for a second successive day, battering stocks, hitting the dollar and boosting oil prices.
Spot gold was quoted at $333.00/333.75 an ounce at 5:38 a.m. ET (1038 GMT), up from $329.50/330.25 at the New York close Monday but off last month's 6-1/2 year high of $388.50.
"New safe-haven buying seems to be creeping into the market at the moment as the easy victory by U.S.-U.K. forces in Iraq seems to be slipping," said James Moore, analyst at TheBullionDesk.com.
Investors' hopes for a quick end to the war have been sinking fast, amid graphic pictures of captured and dead U.S. soldiers, fierce resistance from Iraqi troops, and a tough battle for Baghdad looming.
The mood is a complete about-face from the past few weeks when stock markets rallied and safe-haven positions were dropped in a "relief rally" over the end of uncertainty about the start of the war and a view it would be over swiftly.
Dealers were also braced for more losses on Wall Street to add to the Dow's 3.6 percent sell-off Monday. U.S. equity futures were indicating an opening fall of about 50 points.
A weaker dollar, which dipped to its lowest level on the euro and other major currencies since the start of the war, also supported bullion.
"With hostilities underway liquidity in the gold market has fallen further and volatile trading looks to be the order of the day," said John Reade, metals anlayst at UBS Warburg.
"The market will now react to the perceived progress of the war. A quick, clean victory, which is slightly fading, would likely lead to some selling pressure in the near term," Reade said.
Bullion was set or "fixed" in the London morning session at $333.00 an ounce, up from the previous $329.45 fix.
"Gold is still very much attached to the ongoing situation in Iraq and will continue to be prone to wild swings," said Standard Bank London in a report.
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