Gold prices surged again on Monday as traders turned to the precious metal as a hedge investment amid fears of a global recession. December gold moved to $862.50, up $29.30 for the session. Prices hit as high as $868.90.
Traders continued to react to Friday's big news as Congress passed a $700 billion package to help struggling lenders. Thus far, however, the plan has not generated much confidence that the financial system will stabilize in the near future.
The dollar gained on the euro and sterling, which usually pushes gold lower. But the greenback declined against the yen as traders turned to the lower-yielding Japanese currency over most major currencies.
This will be a pretty slow week on the economic front. The Department of Commerce's international trade balance and the release of the minutes from the Federal Reserve's last meeting headline the agenda. Other reports set to be released include pending home sales and the weekly report on initial jobless claims.
Market players will closely listen to Federal Reserve Chairman Ben Bernanke, who will be speaking on Monday and Tuesday at the National Association for Business Economics annual meeting in Washington. Minneapolis Fed Reserve Bank President Gary Stern and Philadelphia Fed Reserve Bank President Charles Plosser will also speak this week.
The price of silver was little-changed at $10.925 in early trading on Monday. Silber prices hit a two-week low on Friday.
Gold lost $11.10 on Friday as the House finally approved the sweetened bill to bail out struggling banking companies by a solid 263 to 171 margin. This came four days after an original plan was voted down, sending investors towards gold as a safety option.
The precious metal closed the week down more than $55 an ounce as the dollar continued its rebound against other majors. The greenback added to a yearly-high against the euro amid expectations of rate cuts from the European Central Bank by year's end. The buck also hit a yearly-best against the Canadian dollar and a three-week high against the British pound.