By Polya Lesova & Myra P. Saefong, MarketWatch
FRANKFURT (MarketWatch) -- Gold futures rose sharply on Monday, as traders flocked to the precious metal after its price dropped more than $65 an ounce during a three-session losing streak.
Gold for April delivery, the most actively traded contract, gained $16.20, or 1.5%, to $1,069 an ounce in electronic trading on Globex.
Earlier, it hit an intraday high of $1,074.30 an ounce.
Gold is rallying on the idea that the "recent selloff is overdone," said Darin Newsom, a senior analyst at Telvent DTN.
Gold futures dropped more than $10 on Friday, as the U.S. dollar rose to eight-month highs against the euro on fears about high debt levels in several European countries, including Greece, Spain and Portugal. See Friday's metals column.
Last Thursday, gold posted its biggest one-day drop in 16 months. Investors sought the safety of the U.S. dollar as concerns over Europe's debt problems mounted.
"Investors will eventually be realizing that shifting money from Greek, Portuguese and Spanish bonds to the supposed safe haven of U.S. Treasurys or German bunds isn't going to be the solution," said Martin Hennecke, an associate director at Tyche Group Ltd. in Hong Kong.
"With the safety of U.S. and German debt soon starting to become questioned, the default-and-inflation-proof asset class of precious metals will most certainly become an increasingly popular investment alternative again," he said in e-mailed comments.
Gold gained on Monday, even as the dollar continued to strengthen against its rivals. The dollar and gold typically have an inverse relationship; when the dollar rises, gold prices tend to fall.
The euro fell 0.2% to $1.3655 and the British pound dropped 0.5% to $1.5566.
The dollar index (DXY 80.37, -0.08, -0.09%) , which tracks the performance of the greenback against a trade-weighted basket of six major currencies, traded at 80.364 compared with 80.460 in North American trading late Friday.
Elsewhere on Globex, March silver futures rose 27 cents, or 1.8%, to $15.10 an ounce.
