Gold surges, pulls back in response to credit news

By STEVENSON JACOBS

NEW YORK (AP) — Gold briefly shot above $900 an ounce Thursday as panicky investors poured money into safe-haven assets, but the metal later gave back its gains on a report that the government may move more aggressively to steady the teetering financial system.

Gold had gained over $110 in a frenzied two-day rally, including the largest ever one-day price advance on Wednesday. But late Thursday, after regular gold trading ended, investors began selling and shifting money back into stocks on a report that the U.S. government may create an entity to absorb banks' bad loans.

Gold for December delivery jumped as much as $75.50, or 8.8 percent, to $926 an ounce on the New York Mercantile Exchange before easing back to settle at $897, still up $46.50. In aftermarket trading, prices fell $36.30 to $860.70 an ounce.

On Wednesday, gold rose as much as $90 before settling $70 higher at $850.50 an ounce, the biggest one-day jump ever.

Gold had languished for months, but found new life this week as turmoil in the financial sector dramatically increased with the bankruptcy filing of Lehman Brothers Holdings Inc. and the government's bailout of American International Group Inc. The metal regained its appeal as a safe haven in rocky economic times.

Gold surges, pulls back in response to credit news....