Markets & Stocks
Oil, gold prices retreat
September 12, 2001: 12:40 p.m. ET

OPEC reassures markets about oil supplies; dollar rebuilds vs. euro, yen
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NEW YORK (CNNfn) - Oil and gold prices retreated in European trading Wednesday as traders in global markets struggled to assess the significance of the terrorist attacks against the United States.

OPEC moved quickly to give reassurances about the security of world oil supplies, causing oil prices to fall after their sharp surge Tuesday, and amid concerns of expected U.S. retaliation in the Middle East to the assaults.

At 12:26 p.m. ET, London Brent blend futures dropped 59 cents to $28.28 a barrel after Tuesday's $1.61 jump in a knee-jerk reaction to the crash of two hijacked commercial aircraft into New York's World Trade Center and another into the Pentagon in Washington, D.C.

Gold closed in London in abbreviated trading Wednesday at $278.50, down from $286.00 Tuesday.

But the dollar rebuilt strength against other major currencies, recovering almost half the previous day's hefty panic-selling losses, sending the dollar tumbling as much as 3 percent.

The euro traded at 90.15 U.S. cents, down from 91.59 cents late Tuesday. The dollar rebounded to 119.70 yen, up from 118.50 yen

The European Central Bank (ECB), the Swiss National Bank and the Bank of Japan all moved to add liquidity to the financial system, while ECB President Wim Duisenberg said the bank was prepared to offer any help if and when it was needed.

"What is helping the dollar is the moral persuasion of the central banks. There's been contact between the European Central Bank and national central banks that make up the ECB urging calm, urging a block on any kind of speculative trading. The Federal Reserve has also weighted in and asked that dollar trading be limited. I think that will support the currency," said Dave Gilmore, currency analyst with Foreign Exchange Analytics.

"So in the background, too, is the notion that if there is any move to sell the dollar, there will be central bank intervention," Gilmore said.

In overseas bullion trade, gold prices slid sharply amid confused trade in Europe as nervous traders grappled with the effect of the U.S. attacks ahead of the U.K. gold auction.

The last indication for spot gold was $279.50/282.50, down from its last European close of $289.80/290.30, with trading remaining light.

Gold prices spiked $16 to $287.00 from $271.40 Tuesday after news broke about the assaults, sending panicky investors to seek safety in solid assets as world stock markets quickly shed value.

"Gold and crude oil are off their peaks from yesterday. As you would have expected, we have seen a little bit of retracement. Yesterday there was a lot of panic and a lot of fear, which pushed gold prices up. But as the situation has calmed down, obviously the spike in commodities prices has retreated. I don't think anyone believed that it was going to be sustainable," said Amaury de Barros Conti, Gold trader with U.S. Global Investors.

The New York Stock Exchange (NYSE) and the New York Mercantile Exchange (NYMEX) will remain closed Wednesday, leaving London's International Petroleum Exchange as the only option for traders.

In a statement on its Web site, the NYMEX said the Exchange building, also located in New York's financial district, was not damaged but did not say when trading on the Exchange will resume.

"In recognition of the critical importance of our markets to the global economy, it is the intention of Exchange management to resume trading as soon as it is safely possible for the trading community," the statement said. graphic

-- from staff and wire reports