Near-term gold futures in New York closed with a gain of $47.70, or 2.6%, to $1,873.70 an ounce. It was the metal’s biggest one-day advance since early August, and left it just 0.8% below the record closing high of $1,888.70 set on Aug. 22.
Silver also rocketed, rising $1.54, or 3.7%, to $43.02 an ounce. Silver remains below its 30-year high of $48.58 reached on April 29.
The government’s report that the economy created no net new jobs last month stoked fears that recession is becoming a self-fulfilling prophecy, after the global market turmoil in August. With stocks crumbling worldwide Friday, gold and silver attracted frightened money, just as they did for much of last month.
“This economy is in real trouble,” said Matt Zeman, a market strategist at Kingsview Financial in Chicago. What’s more, even though the Federal Reserve is expected to try another rescue by aiming to pull long-term interest rates lower, falling rates could help the case for gold by making bond yields less attractive as an alternative investment.
Gold and silver also got a boost as Europe’s never-ending debt crisis took another bad turn, as Greece fell behind on austerity measures it must meet to qualify for more euro-zone aid.
While the Dow Jones industrial average slumped 253.51 points, or 2.2%, to 11,240.26 on Friday, the average blue-chip stock in Europe fared much worse, tumbling 3.7%.
Europe’s latest mess helped bolster the dollar. The euro fell 0.4% to $1.419, its lowest level since Aug. 10. The dollar also gained against a number of other currencies.
Historically, what’s good for the dollar usually is bad for gold, its archrival. But gold has been in its own bullish world for much of the summer, paying little attention to the dollar’s moves.
The metal now looks primed to try another run for $2,000 an ounce. Gold reached $1,917 intraday on Aug. 22, then was slammed by profit-taking that took the price as low as $1,707 on Aug. 25.
With the economic backdrop worsening, “I think we’re going to see $2,000 gold here very, very shortly,” Zeman said.
The bigger question may be this one: If gold does top $2,000, does that spark another round of profit-taking -- or a panic rush in by investors who've so far missed gold's 11-year bull market?
-- Tom Petruno
Photo: Gold bars at gold and silver separating plant in Vienna. Credit: Lisi Niesner / Reuters