Gold posts record gain
The precious metal jumps 9% amid a weakening dollar and slumping stocks in the wake of the Wall Street meltdown.
NEW YORK (CNNMoney.com) -- Gold prices posted their biggest one-day jump ever Wednesday, as jitters over the health of the financial sector sent stocks tumbling and the dollar weakened.
Gold for December delivery was up $70, or 9%, to settle at $850.50 an ounce. The gain surpassed the previous mark, $64, set Jan. 29, 1980, during a period of surging inflation.
"People are losing confidence in the financial sector," said Peter Spina, president of goldseek.com, a gold trading analysis Web site. "You look around you, where are you going to put your money? Gold is safety."
The commodity is often seen as a hedge against inflation and a safer bet in the wake of the financial crisis roiling Wall Street.
Stocks got hammered on Wall Street, with the Dow Jones industrial average tumbling 449 points, as the market reacted to the $85 billion government bailout of American International Group (AIG, Fortune 500). The rescue plan had investors bailing out of a slew of financial stocks.
The dollar's weakness also contributed to gold's advance.
The euro rose to $1.4311 from $1.4120 in the previous session, and the British pound bought $1.8089, up from $1.7831 Tuesday. Meanwhile, against the Japanese yen, the dollar fell to ¥104.77 from ¥105.65.
Oil settled up $6.01 at $97.16 a barrel, also reflecting the flight to commodities in the wake of Wall Street's financial crisis, as well as a government report showing gasoline stockpiles at their lowest level since 1990.
Another flight to safety saw Treasurys post a big gain, as the benchmark 10-year note rose 25/32 to 105, lowering the yield to 3.39% from 3.49% late Tuesday. Bond prices and yields move in opposite directions.
One analyst cautioned that the increase in gold prices may not last, as it takes just a few buyers to send them moving in either direction.
"We are quite pleased to finally see a positive reaction from gold, given the global market and economic circumstances," wrote Jon Nadler, a senior analyst of gold trading firm Kitco.com, in a note to clients. "Whether or not the rally is broad-based retail buying or just another profit-oriented fund play, remains to be seen." 
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