Gold gained again on Monday and moved further away from its multi-month low from last week. Gold for December delivery ended at $787.00, up $22.50 on the session. Prices hit as high as $789.50 in overnight transactions. MCX October expiry closed the session at Rs 11643 per 10 grams up Rs 222.
The precious metal gained as Lehman Brothers Holdings said it plans to file for Chapter 11 bankruptcy protection. Also on Monday, Bank of America Corp. (BAC) said it agreed to acquire Merrill Lynch & Co. (MER) in a $50 billion all-stock transaction. Meanwhile, American International Group (AIG) has received multiple analyst downgrades.
The greenback saw early weakness in overnight trading versus other majors on Monday in New York, falling to near-term lows against the euro, pound and franc. However, the dollar bounced back to pare most of its losses.
Gold's spike was somewhat subdued as oil prices have plunged after Gulf of Mexico refineries survived Hurricane Ike's weekend hit on Texas without major damage. Crude fell as low as $94.13 in electronic trading, its lowest level in months. On the economic front Monday morning, business activity in the New York state manufacturing sector has shown a notable contraction in the month of September, according to a report released by the Federal Reserve Bank of New York.
The report showed that the index of activity in the sector fell to a negative 7.4 in September from a positive 2.8 in August, with a negative reading indicating a contraction in the sector. Economists had expected the index to edge down to a positive 1.4.
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