Gold Ends Monday 3.3% Higher as Citi Rescue Buoys Stocks, Dents Dollar

From Chris Mullen at GoldSeek.com...

Gold fell $5.30 to $786.20 in Asia on Monday, and silver dropped a couple of cents to $9.48 per ounce, but both metals then soared higher in London and New York trade to end with gains of 3.34% and 8.57% respectively.

Added to Friday’s gain of 5.74%, the Spot Gold price reached 6-week highs vs. the Dollar, while the Gold Price in Euros rose to €640 – up 16% from last week's low.

Citigroup Inc. received a U.S. government rescue package injecting $20 billion of capital to protect its toxic assets, sending stock in the second-biggest US bank 72% higher in New York trade.

In return for the cash and a $306bn guarantee, the government gets $27 billion of preferred shares paying an 8% dividend, plus warrants equivalent to a 4.5% stake in the bank.

Oil rose over 9% on hopes that another government bailout will help spur demand while the US Dollar index plummeted on concerns over other bank failures and the flood of new dollars entering the system.

Treasuries fell as the Dow, Nasdaq, and S&P rose about 5% on relief over the government's plans to bail out Citigroup as many are hopeful that it will help solve the problems facing the financials and the world economy.

Platinum gained $38 to $853.50, and copper gained nearly 10 cents to about $1.67.

Gold and silver equities rose over 11% in the first hour of trade before they sold back off slightly from midday, but they still ended with average 7% gains.

Sales of existing US homes during Oct. came in sharply below both Sept.'s figure and analyst forecasts, down more than 3% month-on-month.

Tuesday at 12:30 GMT brings third-quarter US GDP, expected at -0.5%, and the Chain Deflator expected at 4.2%. At 14:00 comes US Consumer Confidence for November, expected at 39.5.