MW: Gold futures rise above $1,050 an ounce as dollar falls
FRANKFURT (MarketWatch) -- Gold futures gained more than 1% on Monday, as the U.S. dollar fell against other major currencies, raising the investment appeal of the precious metal.
Gold for December delivery rose $12.80, or 1.2%, to $1,053.20 an ounce in electronic trading on Globex.
Earlier in the session, the contract hit an intraday high of $1,059.20 an ounce.
Other metal prices also gained, with December silver futures rising 32 cents, or 2%, to $16.58 an ounce.
In the currency markets, the U.S. dollar declined against its major rivals, boosting gold's appeal. Gold and the dollar have a very strong inverse relationship; when the dollar declines in the value, gold prices tend to rise.
The dollar index (DXY 76.21, -0.16, -0.21%) , which tracks the performance of the greenback against a basket of other major currencies, fell to 76.149 in recent trading from 76.320 late Friday.
Gold prices fell 0.6% on Friday, but still gained 3.8% for the month of October.
U.S. stock futures pointed to a higher opening on Wall Street, as investors awaited the release of the Institute for Supply Management's manufacturing index for October, which is estimated to have risen to 53.0%.
Data on pending home sales and construction spending for September also will be released on Monday. See Indications.
In one of the biggest corporate bankruptcies ever, CIT Group Inc. (CIT 0.38, -0.34, -47.22%) filed for Chapter 11 protection in New York on Sunday.
CIT, a major lender to small and midsize businesses, has struggled to avoid collapse since the recession triggered billions of dollars in loan losses and the financial crisis cut the company off from its main source of financing. See full story.
"The U.S. banking crisis is not over yet, as was indicated this weekend by the insolvency of CIT," wrote analysts at Commerzbank in a note to clients. "This event may induce investors to increasingly shift to safe-haven gold again."
Gold is traditionally seen as a safe-haven asset. Investors tend to buy it at times of financial turmoil.
Crude-oil prices rose 1.4% on Monday, as data showed China's manufacturing sector in October expanded at its fastest pace in 18 months, lifting hopes for a recovery in oil demand.
