Investors flock to gold as oil price tumbles

The fallout from the failure of the White House financial rescue plan has pushed gold to a two-month high, while crude oil continued to slide after a 10% decline in New York on fears that global growth will slow.

"Gold could go a lot higher as more safe-haven asset buying comes into the market," ABN Amro's Charles Dowsett said in Sydney.

Spot gold rose to $925.10 an ounce yesterday, the highest since 31 July, and December-delivery gold advanced 1.4% to $906.70 an ounce.

Gold mining stocks such as Newcrest in Australia are also booming. Newcrest rose 5.7% in Sydney trading.

In the oil markets, US light crude for November delivery fell 59 cents to $95.78 a barrel after dropping $10.52 yesterday to $96.37 — the second-biggest fall since 23 April, 2003. London Brent crude fell 62 cents to $93.36.

Traders said that the financial meltdown suggested demand for oil would fall dramatically.

"It's just getting worse and worse and no one knows when this is going to end," said Toby Hassall, chief analyst at Commodity Warrants Australia in Sydney.

Oil has fallen about 35% since its $147 peak in mid-July.

Oil prices have plunged 11% in the past three days, the most since December 2004.