Gold Rises on Speculation Central Banks Will Cut Interest Rates

Gold rose for the second straight day on speculation that central banks will cut borrowing costs to ease a credit crunch, boosting demand for the metal as an alternative asset. Silver also gained.

Interest-rate futures show an 84 percent chance the Federal Reserve will reduce its benchmark rate by 50 basis points to 1.5 percent by Oct. 29, compared with no chance a month ago. The European Central Bank suggested last week that policy makers may cut rates from a seven-year high. Gold rallied to a record in March after the Fed slashed borrowing costs over seven months.

''The credit-market contagion has spread, people are fearful about putting money into banks, and they're still turning to gold,'' said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. ''A global rate cut, certainly a U.S. rate cut, would be imminent.''

Gold futures for December delivery rose $19.20, or 2.2 percent, to $885.40 an ounce at 9:29 a.m. on the Comex division of the New York Mercantile Exchange. The metal rose 4 percent yesterday. The all-time high was $1,033.90 on March 17.

Silver futures for December delivery jumped 44.5 cents, or 3.9 percent, to $11.77 an ounce. Before today, the price dropped 24 percent this year.

       aluminum tube            aluminum fin strip     copolymer coated  aluminum tape       kitchen cabinet                      zinc strip