* Central banks across the globe cut interest rates
* Gold extends gains to nearly 4 pct
* Investor rush to safer assets boosts gold's appeal
(Releads, adds comments, updates prices)
By Humeyra Pamuk
LONDON, Oct 8 (Reuters) - Gold jumped nearly 4 percent on
Wednesday, as investors sought safer assets despite a
coordinated rate cut by the world's biggest central banks to
restore battered financial markets.
Central banks around the world cut interest rates in unison
in a joint response to the worst financial crisis that the world
is facing in nearly 80 years. []
Bullion dropped below $900 an ounce immediately after the
rate cut announcements, but went back up again as investors
interpreted the rate cut move as a short-term remedy.
Spot gold <XAU=> rallied to $920 an ounce, its highest since
September 29 and was at $902.40 an ounce by 1331 GMT, up $21.8
from 886.60 an ounce late in New York on Tuesday.
"Gold will still continue to gain safe-haven interest," said
Simon Weeks, director of precious metals at Bank of Nova Scotia.
"I do not think the cuts will solve the situation. It will
help smooth the situation, but I don't think there are any
miracle cures at the moment," he said.
The metal touched multi-year highs in several other
currencies. In South African rand <XAUZAR=R>, it touched its
highest recorded on the Reuters data, which goes back to 1990
while in Australian dollars <XAUAUD=R>, it was at the highest
since 1985.
Spot gold has risen 25 percent since mid-September as a
deepening financial crisis, spreading to banks in Europe from
the United States, prompted investors to sell investments in
equities markets and seek refuge in safer assets.
But it is still well below its lifetime high of $1,030.80 an
ounce struck in March of this year.
Physical demand for gold also has shot up, analysts say, as
the banks being taken over by governments or sold to their
rivals prompted consumers to invest in gold coins.
The U.S. Mint said on Tuesday that because of the extreme
fluctuating market conditions for 2008, as well as current
market conditions, gold and silver demand is "unprecedented".
[]
"There is a lot of tightness in the market," said Jeremy
East, global head of metals trading at Standard Chartered . "It
may well continue -- there is a big demand for physical gold and
for ETFs."
Holdings in the world's largest gold-backed ETF, the SPDR
Gold Trust <GLD>, rose to 745.22 tonnes as of Oct. 8 from 744.54
tonne as of Oct. 7. <XAUEXT-NYS-TT>
Oil prices fell nearly $2 a barrel as the continuation of
the global financial crisis heightened the anticipated decline
in crude oil demand while the dollar fell against major
currencies.
Platinum <XPT=> was trading at $996.50 an ounce, down from
$1,004.00 an ounce in New York on Tuesday and after falling as
low as $940 an ounce.
The metal has been hit by heavy selling on fears of falling
demand for autocatalysts. It tumbled to $920 an ounce on Monday,
its lowest level since November 2005, on the back of poor car
sales, especially in the United States.
Prices are well below a lifetime high of $2,290 an ounce
struck in March.
Spot silver <XAG=> was at $11.70/11.77 an ounce after
jumping nearly 5 percent versus $11.51, while spot palladium
<XPD=> was at $194/204 versus $194.00 late in New York on
Tuesday.
(Editing by Peter Blackburn)
