* Gold boosted by safe-haven buying as global stocks drop
* October crude oil futures spiked, boosting gold
* Investors skeptical over U.S. plan to stabilize markets
(Recasts, adds analyst comments, closing prices, market
activity, adds NEW YORK to dateline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Sept 22 (Reuters) - Gold soared nearly 4
percent on Monday as investors switched out of dollars into a
trusted safe haven on fears that a massive U.S. government
rescue plan may not stem the crisis in the financial sector.
"A flight to quality, without a doubt. People are looking
for somewhere to put their money. It would not shock me to see
gold at $950 by the end of the week," said Jonathan Jossen,
COMEX gold options floor trader.
Spot gold <XAU=> traded at $900.60/902.70 an ounce at 2:05
p.m. EDT (1805 GMT), up from $871.15 an ounce at the nominal
New York close on Friday.
Gold benefited as well from its reputation as an inflation
hedge, as U.S. crude oil futures for October delivery <CLV8>
spiked more than $20 per barrel, the biggest gain on record, on
the day the contract expired.
The dollar fell by 2 percent against the euro, dropping to
a three-week low against the common currency, weighed down by
worries about the fiscal impact of the U.S. government's
bailout. []
"What you're really seeing is a loss of confidence in the
dollar," Tom Hartman, a trader at Altavest Worldwide Trading,
said.
"These extraordinary moves by the federal government are
really quite overwhelming to a lot of investors," he added. "We
are seeing a very strong flight to quality."
Investors are awaiting details of the $700 billion rescue
plan, aimed at mopping up toxic mortgage debt. Uncertainty over
the project is boosting gold's appeal as a haven from risk.
U.S. gold contract for December delivery <GCZ8> settled up
$44.30 or 5.1 percent at $909.00 an ounce on the COMEX division
of the New York Mercantile Exchange.
Silver <XAG=> tracked gold higher and was last quoted at
$13.37/13.45 an ounce, up 6.5 percent from Friday's nominal
close of $12.55 an ounce.
HAVEN FROM RISK
Gold is benefiting from renewed interest in bullion as a
haven from risk because jitters in the financial system spook
investors. Equities posted heavy losses last week, fueling a
near 15 percent rise in the price of gold.
Stock markets weakened again on Monday, with U.S. equities
falling more than 2 percent on fears over the government's
rescue plan. European shares also slipped.
However, investor demand for gold is firm. The world's
largest gold-backed exchange-traded fund, New York's SPDR Gold
Trust <GLD>, said its gold holdings rose 24.5 tonnes or 3.7
percent on Sept 19. []
The trust's gold holdings have risen by nearly 11 percent
from a week ago.
Among other precious metals, platinum and palladium were
also strong, supported by a weak dollar and firm gold, and as
traders speculated the metals' recent losses may have been
overdone.
Platinum is down 18 percent and palladium down 15 percent
from a month ago.
Platinum rose more than 8 percent on Monday, while palladium
soared almost 10 percent.
"Some buying into the market is to be expected," said
Standard Bank analyst Walter de Wet. "If platinum falls below
$1,050, some of the producers start looking at the longer term
viability of the PGMs."
"Of course, as the dollar weakens it is supportive," he
added.
Spot platinum <XPT=> was at $1,233.50/1,253.50 an ounce
against $1,134.50 at the nominal New York close on Friday,
while palladium <XPD=> was at $253.00/261.00, up from its
previous finish of $231 on Friday.
(Editing by Alden Bentley and Matthew Lewis)
