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.
The metal's push higher Thursday came after the Federal Reserve stepped up efforts to stem the worst financial crisis since the Great Depression. The central bank pumped $55 billion into temporary reserves in the United States to free up the strained financial system. Hours earlier, the Fed joined other central banks to flood world markets with dollars, hoping to stave off a collapse of international credit markets.
The emergency moves gave some comfort to Wall Street a day after a massive decline, but many investors, fearing more turbulence in coming days, continued to shift funds out of riskier investments like stocks and into the relative safety of precious metals and U.S. Treasury bills.
"This is a very scary time and everyone is asking one thing: 'Where is the safest place to put my money?' Right now, gold looks like a good place," said Kevin Grady, a gold trader at MF Global in New York.
Other precious metals ended higher Thursday. December silver jumped $1.025 to settle at $12.70 an ounce on the Nymex. December copper rose 2.35 cents to settle at $3.006 a pound, while October platinum gained $51.30 to $1,137.60 an ounce.
A weaker dollar also boosted gold Thursday. When the greenback falls, investors often buy gold, silver and other hard assets to hedge against inflation and weakness in the U.S. currency.
But gold is most attractive during times of economic crisis. The metal has long been considered a safe, alternative investment, primarily because it's known for holdings its value over time.
"Even during the Depression, a kilogram of gold bought you a new Ford, Chevy or Plymouth. And even now a kilogram of gold still buys you a new Ford, Chevy or Plymouth, said George Gero, vice president at RBC Capital Markets Global Futures in New York.
Still, gold's trading pattern has been marked by extreme volatility, and analysts noted that prices could fall as quickly as they popped up - which they did in fact do, late in the day. Thursday's rally was already being limited by investors who were unloading positions to cash in on the previous day's advance.
"Perhaps we've had a little too much, too soon on this spike up," Gero said.
