Sept. 18 (Bloomberg) -- Gold climbed for a second day, extending its biggest jump in 26 years, as investors sought a haven from the credit crisis that's sent equity markets tumbling. Silver also rose.

About $3.6 trillion of market value has been erased from global stocks this week, triggered by the bankruptcy of Lehman Brothers Holdings Inc. In March, gold reached a record as the U.S. steered JPMorgan Chase & Co. to buy Bear Stearns Cos. Investors often consider gold a store of value during times of financial uncertainty.

``It's pretty clearly a flight to safety,'' Toby Hassall, an analyst at Commodity Warrants Australia, said by phone from Sydney. Gold may reach $900 an ounce by week's end, he said. ``As long as sentiment continues to worsen, it's likely we'll see upward pressure on gold prices.''

Gold for immediate delivery rose 2.4 percent to $884.25 an ounce at 11:08 a.m. in Sydney. The metal jumped 11 percent yesterday, its biggest gain since Sept. 3, 1982. Silver rose 3.7 percent to $12.40 an ounce.

The U.S. Federal Reserve this week agreed to lend American International Group Inc., the nation's biggest insurer by assets, $85 million in return for an 80 percent stake in the group, while Lehman filed the biggest bankruptcy in history Sept. 15. U.S. stocks slumped to the lowest in three years yesterday, with the Standard & Poor's 500 Index sliding 4.7 percent

`Unprecedented'

``These are conditions we've not seen before,'' said Mark Pervan, a commodity strategist at Australia and New Zealand Banking Corp. in Melbourne. ``When you've got major financial institutions falling over, this is unprecedented.''

Bullion's jump drove gold mining companies higher on the Australian stock exchange.

Melbourne-based Newcrest Mining Ltd., Australia's largest producer of the metal, climbed 14 percent, to A$24.39 at 11:07 a.m. in Sydney, its biggest gain since Sept. 28, 1999. Lihir Gold Ltd. jumped 18 percent and Sino Gold Mining Ltd. gained the most on record, adding 31 percent.

Bullion for immediate delivery had added $118.75 an ounce this week, while futures are up $122.50.

Gold also rose as the VIX volatility index, a Chicago Board Options Exchange gauge reflecting expectations for stock market price changes and a barometer of risk aversion, rose yesterday to its highest since October 2002, ANZ's Pervan said.

``That rising series highlights a high risk to be playing equities,'' he said. ``The heightened uncertainty in U.S. financial markets has seen a switch out of equities and they've played oil and gold.''

Gold futures for December delivery rose 4.3 percent to $887 an ounce in after-hours trading on the Comex Division of the New York Mercantile Exchange at 11:10 a.m. Sydney time. Bullion futures gained 9 percent yesterday, the biggest gain in 9 years.

To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net

Last Updated: September 17, 2008 22:10 EDT