Gold Regains $1,790, Dow Tumbles 520 Points

Gold futures climbed back above $1,790 per ounce Wednesday amid escalating risk aversion in U.S. financial markets.

COMEX gold futures, per the December contract, settled with a gain of $41.30, or 2.4%, at $1,784.30 per ounce, but the yellow metal extended its gains in electronic trading this afternoon. As of 4:05pm ET, gold futures hovered at $1,794.20 per ounce.

Earlier today, the yellow metal surpassed $1,800 for the first time ever, on the way to its latest all-time high of $1,801.00 per ounce.

While gold rallied to a new record level, the broader U.S. equity markets extended their losses. The Dow Jones Industrial Average (DJIA) plunged 519.83 points, or 4.6%, to 10,719.64. This marked the second day this week that the Dow Jones fell more than 500 points, as widespread liquidation engulfed Wall Street.

Jim Steel, a precious metals analyst at HSBC, commented that “The (gold) market remains well bid and the downturn in the equity markets continues to show a lack of investor confidence.”

Gold shares advanced alongside the yellow metal, with the AMEX Gold Bugs Index (HUI) rising 3.1% to 567.09.

Gold Spikes Above $1,800, Then Backs Off

Gold futures spiked above $1,800 per once in mid-day trading Wednesday for the first time ever on their way to new all-time highs. COMEX gold futures, per the December contract, hit $1,801.00 per ounce, a new record high.

However, the yellow metal quickly backed off of that level toward $1,790 per ounce.

The catalyst for the sharp, sudden spike in gold was not clear, as no announcements from U.S. or European policymakers coincided with the move in the yellow metal.

Silver futures jumped alongside gold at the same time, with the COMEX September contract reaching $39.37 before backing off to $39.12 per ounce.

Gold Shares Rally, HUI Posts Best 2-Day Gain Since 2009

Gold shares posted strong gains alongside the yellow metal on Wednesday, as the AMEX Gold Bugs Index (HUI) climbed 3.9% to 571.12 in afternoon trading.

The sector was fueled by another record-setting day for gold, as COMEX futures reached a new all-time high of $1,801 per ounce.

Coupled with yesterday’s 4.5% surge in the HUI, the gold equity composite is now higher by 8.5% in the past two days. This marks the largest two-day gain for the HUI since a 9.0% gain on November 3-4, 2009.

With today’s advance, the HUI is now higher by 5.1% in August. On a year-to-date basis, the HUI remains fractionally lower, by 0.04%.

Notable advancers in the gold sector on Wednesday included Agnico-Eagle Mines (AEM), Randgold Resources (GOLD), and Royal Gold (RGLD). AEM, GOLD, and RGLD jumped 5.5%, 4.6%, and 4.9%, respectively.