Gold hits $1,000, stocks take a tumble


New York : Stock markets dropped sharply on Thursday, extending Wall Street’s losses for a second day, as investors grappled with a precipitous decline in the dollar, poor retail sales, and an uneasy milestone: $ 1,000 gold.

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The bad batch of economic news underscored concerns about a recession.

The Standard & Poor’s 500-stock index shed 1.7 percent within minutes of the opening bell, and the Dow Jones industrials lost more than 200 points, as investors fled to commodities and government bonds.

By late morning, the markets had climbed back somewhat with the Dow off about a 77 points, and the Standard & Poor’s 500 down about 7 points.

Thursday’s exodus from equities – spurred by fears of inflation – nudged gold to its highest-ever nominal price: $1,000 per Troy ounce.

The millennium mark for gold offered an aesthetic thrill, although the price is barely half the inflation-adjusted record high set nearly 30 years ago.

But as gold rose, the dollar fell, The New York Times said.

After struggling for months in the face of lower interest rates and a tightening of the credit market, the dollar tumbled to another record low against the euro, trading at $1.5605 early Thursday.

Overnight, the dollar dropped below 100 yen for the first time since 1995.

Adding to the anxiety, import prices rose last month, fanning fears of domestic inflation.

The Commerce Department said on Thursday that import prices in February were 13.6 percent higher than they were a year ago – one of the highest annual rates on record – putting more pressure on Americans consumers.

The price increases could not come at a worse time. Sales at retail stores dropped sharply in February, the Commerce Department said, a sign that consumer spending has significantly slowed.

Spending accounts for 70 percent of gross domestic product, and economists at ING Bank suggested that the poor retail report was “the final nail in the coffin” for the American economy.

The ailing credit market took its share of hits on Thursday, too.

A prominent investment fund, Carlyle Capital, is on the brink of collapse in the wake of missed margin calls. Its assets are expected to be seized and the fund liquidated, a sign that even high-profile funds with large-scale capitalizations are facing foreclosure.

Investors on Wall Street were also reacting to a painful overnight sell-off in the European and Asian markets. A highly touted plan by the Federal Reserve to inject $200 billion into the financial markets had been met with skepticism from foreign investors, who are also reeling from credit concerns.

In Asia, the Tokyo benchmark Nikkei 225 stock average fell 3.3 percent, the Hang Seng index in Hong Kong dropped 4.8 percent, and the Australian S&P/ASX 200 index in Sydney slid 2.3 percent.

By late afternoon in Europe, the DJ Euro Stoxx 50 index was down 2.9 percent. The pan-European blue-chip index has lost nearly a fifth of this total value this year alone. The CAC 40 in Paris fell 2.9 percent , as did the DAX in Frankfurt. The FTSE in London was 2.5 percent lower.

Ten-year and short-term Treasury bonds rose, and the price of crude oil was running flat at $109.90 a barrel.