Gold Jumps as Wall Street Steadily Rises

Gold continued to rise as Wall Street indexes found stability amid the latest reports on the United States economy.

“The rally is pretty much across the board,” Peter Cardillo, a chief market economist at Avalon Partners, said. “It appears that some of the fear factors that have been in the market have started to subside a bit.”

European exchanges closed higher while indexes in Asia were mixed, Mr. Cardillo said, “but I am not seeing any particular group of equity markets falling.”

At the close, the Dow Jones industrial average rose 148.65 points, or 1.38 percent. The broader Standard & Poor’s 500-stock index rose 1.37 percent, and the Nasdaq rose 2.1 percent.

In Europe, the Euro Stoxx 50 index, a barometer of euro-zone blue chips, rose 1.24 percent, while the FTSE 100 index in London was 0.92 percent higher. The CAC 40 in Paris gained 1.1 percent, and the DAX in Frankfurt rose 2.41 percent.

The latest economic data from the United States highlight an economy that continued to strengthen. The government reported that America’s trade deficit widened in March despite a 3.2 percent increase in exports.

“The trade deficit may have widened in March, but this was a positive report for the U.S. and global growth outlook,” Nigel Gault, the chief United States economist for IHS Global Insight, said in a research note. “It showed sharp increases in both export and import volumes, indicating that the world trade recovery still has plenty of momentum.”

Mortgage applications were also higher. The Mortgage Bankers Association said the composite index, which measures mortgage loan application volume, rose 3.9 percent on a seasonally adjusted basis from one week earlier.

“It is having a bit of a rally here,” Mr. Cardillo said, noting that the trade deficit came in under market expectations. “There is a stable tone to the euro this morning and the fact that we are seeing mortgage applications continuing to rise is basically helping the market.”

Shares in Morgan Stanley tumbled 3 percent in afternoon trading after The Wall Street Journal reported that prosecutors were looking into several mortgage-based investments the firm created several years ago.

Mr. Cardillo noted that the report contributed to pressure on the bank’s shares but the rest of the financial sector appeared to have evaded any immediate impact. “The rise today is pretty much across the board,” he said.

Technology shares — led by I.B.M., Intel and Cisco — led the rise.

Uncertainty about the sovereign debt crisis remains, particularly in Europe, igniting concerns about inflation. That has sent gold higher, rising $25.50 to $1,245.80 an ounce..

The euro continued to struggle, trading at $1.2626 against the dollar.

As part of an effort involving the European Union and International Monetary Fund to give European nations like Greece time to sort out their troubled finances, the European Central Bank said it would buy government and corporate bonds directly “to ensure depth and liquidity in those market segments which are dysfunctional.”

The central bank’s emergency move has led some investors to fear it will ultimately begin to monetize the debt of troubled euro-zone governments, in effect debasing the euro.

Bayram Dincer, a commodity analyst at LGT Capital Management in Pfäffikon, Switzerland, said the rise in the gold price “reflects the fear factor.”

Inflation worries, historically a driving force in the gold market, “are well-anchored,” Mr. Dincer said, pointing to a Bank of England report Wednesday that forecast British consumer prices would remain in check.

“Rather, the gold price rise shows fears about systematic risks,” he said, “the fear of investors that the system would break down.”

Mr. Dincer noted that after adjusting for inflation, the dollar gold price record would be closer to $2,300. However, he said the fundamentals did not support gold-buying much above the current levels.

“It’s unsustainable,” he said. “Investors may be losing touch with reality.”

Despite the run-up in gold prices, credit markets were largely quiet.

Crude oil futures for June delivery fell 31 cents, to $76.06 a barrel.

Asian shares were little changed. The Tokyo benchmark Nikkei 225 stock average fell 0.2 percent, while the main Sydney market index, the S&P/ASX 200, rose 0.6 percent. In Hong Kong, the Hang Seng index rose 0.3 percent, and in Shanghai the composite index closed 0.3 percent higher.

Economic growth reports on Wednesday from across Europe failed to reassure investors that the region’s economies would be able to expand their way out of their debt troubles.

“The similarity among countries is striking given the huge divergence in their fiscal and financial market positions,” Jennifer McKeown, an economist in London with Capital Economics, wrote in a research note, adding that the data “confirm that the recovery was lackluster in the early months of the year.”

The economies of the 16-nation euro zone grew 0.2 percent in the first three months of 2010 from the last quarter of 2009, or about 0.8 percent on an annualized basis.

But Germany, the largest economy in the zone, posted stronger-than expected growth of 0.2 percent; expectations had been for a flat performance. According to the Federal Statistics Agency, the economy was supported by exports, inventories and capital spending but consumer spending, construction and imports weighed on growth.