Gold jumped in Asia as the US dollar fell after the US government seized control of Fannie Mae and Freddie Mac, boosting the appeal of the precious metal as an alternative asset.

 Bullion gained as the dollar declined for the first time in eight days, trading at $US1.4356 against the euro in Singapore from $US1.4267 in New York on Sept. 5. The seizure of the two lenders came after the biggest surge in mortgage defaults in at least three decades threatened to topple the companies making up almost half the US home-loan market.

 ``The US government rescue of Fannie Mae and Freddie Mac means the financial situation is not stable yet,'' Wallace Ng, chief trader for precious metals in Asia Pacific for Fortis Bank, said today by phone from Hong Kong. ``That's bearish for the dollar and supportive for gold.''

 Bullion for immediate delivery jumped as much as $US13.20, or 1.6% to $US816.70 an ounce before trading at $US816.13 at 9:43 a.m. in Singapore. Gold declined 3.3% last week while the dollar gained 2.8% against the euro. Silver for immediate delivery was 3.6% higher at $US12.71 an ounce.

 The precious metal was also buoyed by higher energy costs as crude oil in New York rose from a five-month low in New York because the approach of Hurricane Ike delayed the resumption of production in the Gulf of Mexico.

 Crude oil for October delivery rose as much as $US2.72, or 2.6%, to $US108.95 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $US108.79 in Singapore.

 ``Another source of demand for gold comes from investors who have shorted the precious metal in previous weeks,'' Ng at Fortis Bank said. ``Some of them now tried to square the positions by buying back the metal.''

 December-delivery gold added 2% to $US819.20 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange in Singapore.

 In Japan, gold for August delivery on the Tokyo Commodity Exchange soared 4.6% to 2,878 yen a gram ($US826 an ounce).

Bloomberg News