Gold Rises, Halts 8-Session Slump, as Stocks Fall; Silver Gains

March 5 (Bloomberg) -- Gold futures rose, snapping an eight- session slump, as some investors purchased the precious metal as an alternative to stocks. Silver climbed.

European equities fell after rebounding from a 12-year low yesterday, and U.S. stocks headed for the fourth straight weekly decline. Gold dropped 9.5 percent in the previous eight sessions, the longest slump since September. On Feb. 20, the metal topped $1,000 an ounce for the first time in 11 months.

“As equities continue to liquidate, we can see safe-haven buying in gold,” said Tom Pawlicki, an analyst at MF Global Ltd. in Chicago. “Yesterday’s rally in stocks doesn’t have much staying power.”

Gold futures for April delivery rose $21.10, or 2.3 percent, to $927.80 on the Comex division of the New York Mercantile Exchange.

Silver futures for May delivery climbed 20.5 cents, or 1.6 percent, to $13.12 an ounce.

Gold has gained 4.9 percent this year, while silver jumped 16 percent.

This week, the Dow Jones Industrial Average dropped below 7,000, the lowest level since 1997. Banks seized homes at a record pace in the fourth quarter as unemployment rose to a 15- year high.

Mortgage delinquencies increased to a seasonally adjusted 7.9 percent of all loans, the highest in records going back to 1972, the Mortgage Bankers Association said today. Loans in foreclosure rose to 3.3 percent, also an all-time high.

‘Market Fears’

“Investors are buying gold due to financial-market fears,” said Jeffrey Christian, a managing director at CPM Group in New York.

Since the second quarter of 2007, banks worldwide posted almost $1.2 trillion in writedowns and losses related to the credit crisis. Shares of Citigroup Inc., once the world’s biggest bank by market value, dropped below $1 today.

“We continue to think investors should own gold as a hedge against the increased riskiness of other assets,” analysts at Jefferies Group Inc. said in a report.

Gold denominated in other currencies may gain as central banks slash borrowing costs to stimulate their economies.

The Bank of England lowered its benchmark rate to 0.5 percent and the European Central Bank cut its rate to 1.5 percent. In the U.S., the federal-funds rate is zero to 0.25 percent.

Last month, gold priced in euros and pounds rose to records. Comex futures reached an all-time high of $1,033.90 almost a year ago. The price climbed to $1,007.70 on Feb. 20.

Gold producers will have “tremendous” profits this year as the metal remains near a record and mining costs decline, said John Hathaway, the managing director of Tocqueville Asset Management LP.