Jan. 29, 2008 (Investor's Business Daily delivered by Newstex) --

Maybe it's an anxiety shelter, but gold has investors luminous these days.

The yellow metal hit an all-time high of $923.40 an ounce last week, as folks rushed to park their funds in the perceived safe haven of gold.

Since man began mining it, gold has been seen as a hedge against tough times. Current equity and credit market woes, record high oil prices and fears about the U.S. economy helped gold rise more than 30% percent in 2007.

While U.S. economy concerns are the biggest factor in the metal's jump, it's not just fear driving the price up.

First, the world's gold supply is reduced. South African gold mines have been shut down since Friday because of that country's severe power outages. South African officials have reduced exports and rationed power in emergency power-saving measures, but say there's no foreseeable end to the outages.

Power Outage

Every day without power costs the country's mining industry about $27 million and keeps gold supply in check.

Another factor in the rising price is Dubai's ongoing month long shopping festival. Analysts expect that the country -- a major gold-trading hub -- will see bigger gold jewelry sales during the festival.

 

Mon Jan 28, 2008 5:12 PM GMT

By Atul Prakash and Veronica Brown

LONDON, Jan 28 (Reuters) - Gold and platinum sailed to record highs on Monday, boosted by dollar weakness and a power crisis in major producer South Africa that derailed output.  The rise in precious metals also pulled silver to a 27-year high..

Spot gold hit a historic $929.20 per ounce before paring gains slightly to stand at $927.50/928.40 an ounce by 1659 GMT, against $913.00/914.00 late in New York on Friday. 

The dollar fell versus the euro, making bullion priced in the U.S. currency cheaper for non-U.S. investors, as markets anticipated the U.S. Federal Reserve's policy meeting this week.

Markets are betting that the Fed will cut interest rates by as much as 50 basis points after the two-day policy meeting ending on Wednesday, following last week's hefty 75-basis-point cut in a rare move between scheduled meetings.

Those expectations were heightened after data showing weaker than expected U.S. new home sales in December.

On the fundamental front, South African mining companies hope to resume production later this week after being allowed to carry out underground maintenance work in mines across the country that have been crippled by a power crisis.

"We now actually do have a compelling fundamental story on precious metals, due to South Africa and the rest of the African subcontinent," said Lars Steffensen, managing director of commodity trading at Ebullio Capital Management.

"I would say that with this rally, 50 percent of it is a dollar story because of the interest rate cuts and 50 percent is a fundamental story," he added.

In other bullion markets, U.S. gold futures sustained gains, with the most active February contract hitting a record $929.80.

With the dollar's fall and U.S. recession fears persisting, analysts said safe-haven sentiment for gold remained positive. . .

 

 

Gold prices surge after South Africa closes its mines.

by Megan Barnett, Jan 25 2008

Forget about $100 oil. Try $1,000 gold.

A national emergency in South Africa has driven the price of an ounce of gold to another new high, and there are no signs of its momentum slowing. It rose to $921.30 in London trading, surpassing the $914 record set earlier this month.

South Africa, the world's second-largest gold producer after China, shut down its mining operations today as the country faces acute power outages. The state-owned power company Eskom ordered all mines to evacuate underground workers and cease mining activity in order to save power.

The South African government called the situation a national emergency, and it has threatened to ration electricity, the Guardian reports.  Eskom said that the mine closures could last up to six weeks. It also warned that blackouts would continue for years until more power stations are built or another solution is found.

"The unprecedented, unplanned power outages must now be treated as a national electricity emergency situation that has to be addressed with urgent, vigorous, and coordinated actions," said Alec Erwin, South Africa's Minister of Public Enterprises. "We are viewing the next two years as being critical."

The electricity shortages are being blamed on increased demand after years of economic growth in the country.

South Africa's shutdown only adds to the pressure on gold prices created by the combination of a weak dollar, rising oil prices, and unstable equity markets.

Earlier this week, analysts at Morgan Stanley and Credit Suisse raised their outlook for the metal to $950 in 2008 and $1,000 in 2009. Barclays Capital is even more bullish: Their forecast expects that gold will reach $1,000 by this summer, according to the Financial Times.

By Pham-Duy Nguyen

Jan. 24 (Bloomberg) -- Gold topped $900 an ounce in New York for the first time in a week after the dollar dropped against the euro, boosting the appeal of the precious metal as an alternative investment. Platinum futures surged to a record.

European Central Bank officials signaled interest rates would remain steady to cap inflation. The Federal Reserve on Jan. 22 slashed the benchmark U.S. rate by 0.75 percentage point in an emergency move. Gold surged 31 percent last year as reductions in borrowing costs sent the dollar 9.5 percent lower against the euro.

``The biggest factor fueling the rally is going to be continued easing by the Fed while the ECB stands pat,'' said Matt Zeman, a metals trader at LaSalle Futures Group Inc. in Chicago. ``The dollar should keep on losing ground against the euro, so we should see another record in gold in the next two weeks, if not sooner.''

The dollar fell to the lowest ever against the euro last year as a housing slump and losses in the subprime mortgage market forced the Fed to reduce borrowing costs 1 percentage point. In 2007, the ECB raised rates 0.5 percentage point to 4 percent.

The euro rose as much as 0.8 percent to $1.4742 today, and European equities had the biggest gain since 2003 after U.S. stocks rebounded yesterday.

``Clear expectations that the Fed will cut once again next week, and cut until some signs of stabilization emerge, continue to fuel the precious metal,'' said Jon Nadler, an analyst at Kitco Minerals & Metals Inc. in Montreal.

China reported its economy expanded more than 11 percent for the fourth straight quarter, easing concerns global economies may sag.

 ``The markets sense more stability,'' said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois. ``The Fed is going to drop rates again, and that's going to hurt the dollar and help gold.''

By Atul Prakash

LONDON, Jan 23 (Reuters) - Gold pared most of its losses in volatile trade on Wednesday on safe-haven buying and bargain hunting at lower price levels, traders said.

Longer-term sentiment remained strong and the metal was expected to exceed this year's historic highs of $914 an ounce.

Gold fell as low as $876.40 an ounce before climbing to $895.60. The metal was quoted at $887.20/887.90 by 1638 GMT.

It closed at $890.30/891.00 in New York on Tuesday, when prices tumbled to a 3-week low of $849.50 before a surprise rate cut by the U.S. Federal Reserve sparked a rebound to $894.30.

"Initially we saw it off with weaker stocks. Although there may be some flight-to-cash selling around, increasingly people need some kind of safe-haven to cling to," said Simon Weeks, director of metals trading at Bank of Nova Scotia.

"I think the dip to $850 was your last chance for a while to buy some 'cheap' stuff."

Gold, which moved in a range of more than $40 on Tuesday, has lost nearly 3 percent since hitting a record high of $914 in January, as sliding energy and global equity prices forced investors to sell the metal to cover margin calls.

The Federal Reserve on Tuesday cut benchmark interest rates by three-quarters of a percentage point -- the biggest rate cut in more than 23 years -- in an emergency bid to boost a U.S. economy that some fear is on the verge of recession.

"Gold prices benefited from yesterday's rate cut, and further cuts in addition to inflationary fears and concerns about growth of the economy are likely to buoy prices in forthcoming months," said Suki Cooper, analyst at Barclays Capital.

"But we would not rule out a short term price correction."

A Reuters global poll of 50 traders and analysts showed average gold prices will surge more than 20 percent this year and retain most gains in 2009 as dollar weakness, market turmoil and inflation fears stoke investor interest.

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Investors are pulling out of the market and sitting on piles of cash -- but those money markets are earning barely enough interest to offset inflation.  By converting those liquid assets into physical gold, they can protect and preserve the buying power of those declining dollars. 

By MADLEN READ 01.22.08, 6:23 PM ET

The opening bell hadn't even sounded on Wall Street when the Federal Reserve announced an emergency interest-rate cut. The Dow Jones industrial average fell 465 points - including 300 in the first minute - then rebounded to finish down a more bearable 128.

The recovery Tuesday was a victory of sorts for a battered market. But a long-term comeback may depend on factors much more difficult to achieve - a turnaround in the housing market and renewed confidence among U.S. consumers, who hold up most of the economy.

The alarming early drop in U.S. stocks followed the lead of markets abroad, where investors fled stocks and sent indexes plummeting on fears of a U.S. recession that could spread to other global economies. . . .

By the close, the Dow had recovered to a loss of 128.11, or just over 1 percent, at 11,971.19.

Before trading began, the Federal Reserve moved to slash its benchmark federal funds rate by 0.75 percentage points, to 3.5 percent. It was the widest cut since 1990, the beginning of what the Fed says is a comparable period in the way it handled the rate. . . .

The Dow is down nearly 10 percent since the beginning of the year - logging its worst first 14 trading days of the year ever. It is down more than 15 percent since its record close of 14,164.53 on Oct. 9, and is at its lowest close since Oct. 17, 2006.

Investors are well aware that housing worries remain: Many adjustable-rate mortgages - similar to those that went bad last year - will still be adjusted higher, and home prices are expected to keep falling this year.

Financial companies have lost billions of dollars because of those mortgages, retail sales are falling and companies in general aren't on a spending spree.

Investors, both institutional and individual, are also in a defensive mode, and an interest cut won't immediately change that. In the week ended Jan. 15, when many on Wall Street believed a rate cut was in the offing, investors shoveled money into cash reserves at a record pace, according to iMoneyNet. Assets in money market funds ballooned by $15.96 billion to a high of $3.17 trillion.

And investors pulled an estimated $18.2 billion out of mutual funds, according to TrimTabs Investment Research. So far this year, investors have shifted $41.4 billion out of these investments. . . .

Tue, Jan 22 2008, 14:00 GMT  - FX Street.com

LONDON (Thomson Financial) - Gold jumped by more than $10 in the immediate aftermath of an emergency 75 basis point rate cut from the US Federal Reserve, as the central bank of the world's largest economy moved to try and stave of a recession which could spread around the world.

Gold jumped to an intraday high of $877.85 immediately after the announcement, having been trading around $863 before versus $865.10 at the close in New York yesterday.

Gold has been boosted by a weakening dollar in response to the cuts, as investors buy into the precious metal as an alternative to the most common form of currency reserves.

Broader financial fears, heightened now by what may be seen as a panic move from the Fed are also attracting safe haven flows into bullion.

Speaking earlier, Scotia Mocatta analyst Simon Weeks said, "It's very easy to get pushed into doing something by the market. I think it would probably do more harm (to market sentiment) than good."

Rumours had been circulating throughout the market all day that an emergency cut was being planned, but the majority of metals analysts had dismissed the claims as the usual chatter which always emerges when financial panic takes hold.

Global equities plunged yesterday's on fears of a US recession. US equities were tipped to open sharply lower today, having been spared much of yesterday's bloodletting with markets shut for the Martin Luther King public holiday. Following the Fed announcement predicted losses have been trimmed.

At 1.32 pm, spot gold was trading at $872.05 per ounce, having eases slightly from its earlier intraday high.

 

Copyright AFX

 

 

THE price of gold has always been a way to keep score of economic, financial and political instability, but the game may be changing. The dollar is weak, inflation is troublesome and the world isn’t getting any safer, but it is hard to see how those factors alone drove gold from just over $250 an ounce in 2001 to more than $900.

The decline in the dollar over the same time works out to less than 5 percent a year. The reported level of inflation is a fairly ordinary 3 percent or so, and government calculations do not take account of falling home prices and technological innovations that give consumers more bytes for the buck. As for politics, terrorism remains a threat, but it seems no greater or smaller than it has been most of the decade.

What has changed, many say, is that gold no longer benefits just from threats to prosperity but from prosperity itself.

“Gold is the ultimate commodity, and it carries the added cachet as a safe haven,” said Robert D. Arnott, chairman of Research Affiliates, an asset-management firm. “Demand for gold plays a role in a strong economy, in a turbulent economy and also when there’s inflation.”

The supply-demand balance could send gold to $1,000 an ounce before long, said Vahid Fathi, an analyst for Morningstar.  New supplies of ore are hard to find, he noted, and central banks have scaled back bullion sales. As for demand, it is strong from “the new class of prosperous consumers out there in China and India that traditionally have an affection for gold,” he said. . . .

 

January 7, 2008

With more voices adding every day to the chorus predicting the world's biggest economy will go into a recession, diversifying away from U.S. stocks is a healthy strategy, analysts told CNBC on Monday.

Traditional defensive sectors are consumer staples and food. But apart from those, commodities, especially gold, are increasingly believed to be a safe bet.

The technology sector, which has been used as a refuge until not long ago, should be carefully assessed and stocks linked to the financial sector or consumers should be avoided, Alexis Dawance fund manager at Global-Cap SA, told "Worldwide Exchange."

But technology companies in the restructuring or outsourcing business are likely to fare well, added Dawance, who also said he was "pretty negative" on the U.S. economy.

His gloom is shared by other economists.

Change in Portfolio

"From what I have seen so far, I would still tend to be very cautious on U.S. equities," Professor David Costa, Dean at the Robert Kennedy College, told "Power Lunch Europe."

"I think this is an excellent time to change your portfolio in view of being a bit more defensive," Costa added.

A more defensive strategy would focus on commodities, agricultural staples such as wheat but also on gold, which is positively influenced by the current situation when "central banks are cutting rates and are probably buying gold," he said.

Gold prices, which reached a record high of $869.05 an ounce last week, surged 32 percent in 2007 and are around 4.5 percent up this year.

Gold Rush

The fall in the U.S. dollar, concerns about inflation and fears that the effects of the subprime crisis will spread to the overall world economy have all contributed to this rise.

But supply and demand factors also play an important role, Ross Norman, from TheBullionDesk.com, told "Power Lunch Europe."

Global mine production is falling, with output in South Africa, the world's largest gold producer, at its lowest since the thirties, Australia and Canada also declining, and only China rising, Norman said.

"On the supply side we are seeing peak gold, just as we're talking about peak oil production," he said. "The supply-demand fundamentals are very attractive, and this is driving institutional investors in." 

Copyright CNBC 

  

The Capital Gold Group, Capital Gold Group, gold, gold prices, safe haven, hedge, inflation hedge, recession, defensive investment, gold IRA, IRA gold, gold retirement plans

By JACKIE FARWELL – January 18, 2008

NEW YORK (AP) — Gold prices settled slightly higher Friday after an economic stimulus plan announced by President Bush failed to soothe recession worries, boosting the metal's appeal as a safe investment.

Energy prices rose, and agricultural futures ended mostly lower.

Gold prices swung almost $50 this week, rocketing to an all-time high of $916.10 Tuesday and plunging to $870.60 Friday ahead of Bush's remarks. Later, an ounce of gold for February delivery climbed $1.20 to settle at $881.70 on the New York Mercantile Exchange.

"The market's been kind of volatile today," said James Steel, analyst with HSBC in New York. "We're still in an overall correction phase. It's been hard to get upside traction."

Gold breached $900 an ounce for the first time last week. It has soared during the past year on its appeal as a hedge against inflation and as a safe investment in times of political and economic uncertainty.

Gold prices inched up after President Bush endorsed a $145 billion economic stimulus plan designed to fend off a recession. The announcement failed to console investors, adding to gold's appeal as a hard asset known for holding its value.

Bush said the plan must include tax incentives for business investment and speedy tax relief for individuals, most likely in the form of one-time rebates.

Federal Reserve Chairman Ben Bernanke on Thursday backed the idea of a rescue package, but did not endorse a specific plan.

The call for economic intervention comes amid mounting worries that a prolonged housing slump and tight credit market will force consumers and businesses to tighten their purse strings, sending the country into its first recession since 2001.

Word of the stimulus plan boosted the dollar Friday, weighing some on commodities prices.

A higher dollar can make commodities less attractive as an alternative investment, and can also dampen demand from foreign buyers as their currencies weaken.

The euro fell to $1.4621 against the dollar in late afternoon trading.

 

January 17, 2008

 

LONDON (AFP) — Gold prices could hit $1,000 an ounce in 2008 after this week's record-breaking run that was fuelled by fierce investment demand, precious metals consultancy GFMS said Thursday.

"Investor appetite for gold at the moment seems undimmed and this should push gold higher over the year," GFMS chairman Philip Klapwijk said as the independent research group published its annual Gold Survey.

"Predicting the top is never easy but we always thought the $900 barrier could easily fall quite soon and then we have to start viewing $1,000 as a clear possibility for later this year."

Gold prices jumped to a record high $914.30 earlier this week on the back of factors that included the struggling dollar and geopolitical concerns in Iran and Pakistan.

That upwards trend is set to continue, according to GFMS.

"GFMS expect the surge in investment to be driven by those factors that fuelled the boom witnessed in the final four months of 2007," the consultancy said.

Those factors included "a weak dollar, record oil prices and their inflationary consequences, the US sub-prime (home loan) crisis and its threat to (economic) growth in the United States and perhaps elsewhere, and lastly geopolitical tensions."

Soaring demand for jewellery production in China and India has also supported bumper gains.

The weak dollar encourages demand for gold because it makes the precious metal cheaper for buyers using stronger currencies.

Economic and geopolitical turmoil, meanwhile, attracts investors to gold because the metal is regarded as a safe-haven. It also guards against rising inflation caused largely by soaring crude oil prices.

Gold is trading at elevated levels, despite slipping back under $900 per ounce in recent days. On the London Bullion Market on Thursday, gold was at $884.14.

The yellow metal had struck its historic high on Monday, after surging past $900 for the first ever time in New York at the end of last week.

Even without geopolitical support, gold could still strike more record peaks, according to the GFMS report.

"We can easily see higher gold prices without fireworks in the Middle East or Pakistan, though any political drama there or elsewhere is highly likely to rally the price yet further," Klapwijk added.

GFMS forecasts that gold will trade at an average of $840 in the first half of 2008, with further increases thereafter.

Klapwijk conceded that gold would probably retreat in the near term following its recent blistering gains -- but would aim higher in the second half.

"This temporary fall back explains why our forecast average for the first half at $840 could seem a bit low in light of current levels," he said.

"But that's still up almost 30 percent year-on-year and with this period of consolidation out the way ... that's when we should see the convincing drive towards $1,000 an ounce."

 

Copyright AFP

LONDON, Jan. 14, 2008 (Thomson Financial delivered by Newstex) -- Gold raced to a series of fresh records above $ 910 USD per ounce as economic uncertainty fueled investment and as the dollar remained weak.

The precious metal, which has gained around 60 pct since this time last year, rose to a record $914.10 USD per ounce this morning.

Dollar weakness spurred buying as it made gold and other commodities denominated in the greenback relatively cheaper. Elsewhere, gold rose in line with the higher oil price which increased the metal's appeal as a hedge against inflation.

Global economic uncertainty, meanwhile, spurred safe-haven buying and expectations the US Federal Reserve will cut its main interest rate by half a percentage point this month kept the dollar weak, in turn helping gold's rally.

Gold has become the 'third reservable currency in the world, following the US dollar and the euro... in a world of economic and political confusion, gold reigns,' said Dennis Gartman, editor of daily trading note The Gartman Letter.

US economic weakness, stemming from the subprime crisis has, in part, weakened the dollar while the financial turmoil itself has fueled gold-buying as a safe-haven.

Investors have been keen to buy gold which can be used to either store value or as an asset they can liquidate in times of turmoil to raise cash to cover losses.

'With uncertainty regarding the future path of US economic growth, the current economic woes should continue to support the metal for now,' said Standard Bank analyst Walter De Wet . . .

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NEW YORK, Jan 14 (Reuters) - U.S. gold futures surged to a
record high above $910 an ounce on Monday, fueled by a
combination of strong fund buying amid a dollar slide, short
covering and speculation of further rate cuts.

 Meanwhile, a Citigroup metals analyst said that gold prices
will test a record $1,000 an ounce this year, boosted by
growing investment interest, safe-haven demand and strong
market fundamentals.

 At 10:53 a.m. EST (1553 GMT), the most-active gold contract
for February delivery at the COMEX division of the New York
Mercantile Exchange GCG8 rallied $11.50 or 1.3 percent to
$909.20 an ounce. It hit a record high of $915.90 and bottomed
at $893.10.

 The dollar dropped to seven-week lows against the euro and
yen on Monday as concern weak U.S. corporate earnings will
prompt more interest rate cuts weighed on currency markets.

 The Federal Reserve is widely seen cutting its key rate in
January by a half-point to 3.75 percent, and futures are pricing
in the risk of a Fed rate cut even before the Jan. 29-30
meeting. 

 Gold is viewed as an alternative to holding the dollar.
Therefore, the value of gold often rises when the U.S. dollar
falls.

 "Risk averse investors jumped on the bandwagon as the $900 
resistance was surpassed," Gero said.

 Gold's appeal as a safe-haven investment has increased due
to worries of further write-downs among major financial
institutions and credit market meltdown in the United States,
the world's biggest economy.

 In just three weeks, the February contract has jumped
nearly $120 to Monday's peak of $915.90 from its bottom of
$799.50 on Dec. 21.

 In research news, John Hill, director, metals research, at
Citigroup in San Francisco, told clients in a note dated Sunday
that he fully expects a test of $1,000 ounce in 2008.

 "We believe gold has entered a new investment-driven phase,
in a much more hospitable macro setting. Catalysts are rotating
from safe-haven demand, to currencies, to the re-flation trade,
as new buyers enter the market," Hill said.  

 Spot gold <XAU=> fetched $908.50/909.20 an ounce, up from
Friday's New York close of $895.70/896.50. London bullion
dealers fixed the afternoon spot reference price at $902.00.

SAN FRANCISCO (Dow Jones) -- Global inflation, stock volatility, the upcoming Chinese New Year holiday -- you name it, there's a reason out there for gold's rapid rise and the likelihood it will hit a new eyeball-popping level of $1,000 an ounce.

When they're all taken together, however, the big lure to gold continues to be its tendency to hold value when the rest of the investment picture turns septic. As it's done of late, with U.S. inflation measures hitting multi-decade highs, U.S. stocks starting off the year with their biggest drop in 30 years and the global outlook looking both inflationary and at risk of a slowdown.

"It's pretty much an investment story," said Neil Meader, research director at GFMS Ltd., a London precious metals consultancy that tracks global supply and demand data for gold. "We're not really seeing supply constraints pushing the price higher; it's not really driven by fabrication demand," he said.

On Friday, the front-month futures on the New York Mercantile Exchange topped $900 an ounce for the first time, putting $1,000-an-ounce gold in the sights of some analysts.  

As stock markets tumble, gold makes an attractive alternative investment. And as the dollar weakens, it acts as a hedge, notes Meader.

Among all the reasons to invest in gold, however, the bullion's ability to protect against inflation usually tops the list. And that's got some inflation- watchers worried.

"Approaching $900 an ounce does cause us to be significantly concerned about the inflation outlook, particularly because there doesn't seem to be a lot of concern from [Federal Reserve Chairman Ben] Bernanke," said Conrad DeQuadros, senior economist for Bear Stearns.

Price growth is on the run, both in the United States and abroad, largely driven by record crude-oil prices that recently topped $100 a barrel. U.S. wholesale prices in November made their biggest annual jump since 1981. U.S. import prices for December, released Friday by the Labor Department, have risen nearly 11% in the past year, the fastest rate since the early 1980's.

Energy inflation is not just squeezing U.S. motorists and manufacturers. China earlier this week took steps to freeze regulated prices of gasoline, natural gas and electricity to curb its inflation, which hit a new 11-year high of 6.9% in November.

Helping drive gold prices higher are "inflationary pressures in the Mideast and emerging markets," said Stephen Walker, gold analyst for RBC Capital Markets. "There's a strong correlation with oil prices, there's a component of geopolitical risk."

And recent statements from Bernanke suggest the Fed has put inflation on the backburner as it frets about the possibility the United States is slipping into recession, says Bear Stearns' DeQuadros.

In a speech Thursday, Bernanke said the economic outlook has taken a turn for the worse this year, positioning the central bank to take "substantive additional action as needed to support growth."

Futures traders are now expecting another 150 basis points in cuts to the fed funds rates, which now stand at 4.25%, by year-end.

These expectations, and the Fed's stance on rate cuts as telegraphed by Bernanke, are helping push gold prices higher. But if the Fed switches gears and tries to crack down on inflation, gold could lose some of its appeal.

"I think gold prices will be an early indication that the Fed has begun to reduce inflation risks," said DeQuadros.

Of course, bad times aren't the only reason gold gets bid up. Plenty of gold ends up transformed into jewelry and other personal items, particularly in India, China and East Asian countries. This demand has generally risen along with economic growth in China and other gold-loving countries. That growth, in turn, has gone hand-in-hand with commodity-fueled inflation.

Bhutto’s Assassination Reminder of Global Instability - Investors turn to Gold AS Safe Haven

Killing of Bhutto Adds to Worries in Markets

by Robert Gavin, December 28, 2007

The assassination of Pakistani opposition leader Benazir Bhutto is adding to recession jitters already shaking investors in global financial and commodity markets.

With the US economy viewed as dangerously close to recession, many analysts say any new shocks, such as another surge in energy prices, could tip it over the edge.

Bhutto's killing in Pakistan yesterday is another reminder of global instability helping to send fuel prices higher and stocks sharply lower.

"People want to believe the economy is going to be OK," said Nigel Gault, US economist at Global Insight, a Waltham forecasting firm. "But any hint of bad news, and fear takes over very quickly."

The Dow Jones industrial average plunged nearly 200 points, or 1.4 percent, following Bhutto's death. Meanwhile, investors flocked to safe havens such as gold and government bonds.