Markets & Stocks
Oil and gold prices spike
September 11, 2001: 5:56 p.m. ET

International traders seek safe havens; await Mid East reaction
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NEW YORK (CNNfn) - Oil prices surged Tuesday in anticipation of an expected U.S. retaliation in the Middle East to terrorist attacks in the United States.

But the dollar fell against other major currencies after apparent terrorist attacks destroyed the twin towers of the World Trade Center in New York and left the Pentagon burning in Washington – the worst act of terrorism in U.S. history.

Gold soared in bullion trading Tuesday amid a panicky grab for secure assets as global markets try to grasp the enormity of attacks which left New York's World Trade Center in flaming ruins and the world's main financial district in utter disarray.  

The final price for the benchmark December gold contract was frozen at $280 an ounce, up $6.30, after the attacks.  

Business at New York stock and commodity exchanges was shut down indefinitely.

Lower Manhattan was in chaos after the soaring twin symbols of U.S. financial power toppled to the ground, with feared catastrophic loss of life at the complex, where around 50,000 people worked at banks, brokerages and other WTC employers.  

In overseas bullion trade, gold soared nearly six percent, or $16 an ounce, after the attacks, with the London benchmark fixing price climbing to $287.00 in the afternoon from the morning's benchmark $271.40.  

It was difficult to judge where the market would go now with the COMEX gold futures market shut after the blasts, said Rhona O'Connell, market analysis manager at the World Gold Council.  

"The market is extremely nervous, reacting to headlines and we'll track to a degree what happens in energy markets and the currencies," the New York bullion dealer said. "It's going to continue to be sensitive to headlines. What more can you say?"  

The last indication for spot gold in late New York was $286.00/$291.00, up from $271.40/1.90 late Monday.  There were large volumes of business at the London gold fix as investors ran for the security of a hard asset, with the devastation at the Trade Center making some paper assets look suddenly more risky.  

"There is panic buying of metals, gold and oil -- it is complete pandemonium," said Robin Bhar, metals analyst at Standard Bank London. "Gold and oil have gone up and it is a drive towards safe-haven territory."  

U.S. Treasury securities were frozen at higher levels when bond markets closed after the disaster.  Global equities markets tumbled as news of the audacious assaults shocked investors, but federal regulators vowed the disruption to U.S. markets would be temporary.  

"There is a sense of panic in the market right now," said Phil Flynn, vice president and senior energy analyst at

The ultimate effect on commodity prices will depend, in large part, on the response of Arab countries, said Flynn. "We're looking for them to quickly condemn the attacks and to understand that a retaliatory response is called for," he said. graphic

-- from staff and wire reports