Gold rally draws more investors back into the fold

NEW YORK: Investors returned to gold on Monday.

Gold joined most commodities in a stronger finish, largely driven by a weaker dollar. Since commodities are priced in dollars, a weaker dollar makes them more of a bargain for traders who use other currencies.

The precious metal also attracted investors who want to broaden their portfolios because of uncertainty about the global economy.

Gold for December delivery rebounded Monday, finishing up $15.40 at $1,758 an ounce, after it eased off a high just above $1,800 an ounce during last week's volatile trading. Gold is up 24 percent for the year.

Gold often is considered a relatively stable asset to hold during uncertain economic times. It also draws investors who use it as a hedge against currency movements.

"Everybody is looking at gold for some particular reason or another, from central banks looking for a currency hedge to the average investor looking to diversify their portfolio and move money out of dollars," said Dave Meger, vice president of metals trading at Vision Financial Markets.

Meger believes the fundamentals underlying the market will remain strong because of persistent concerns about U.S. and European debt issues and what that may mean for the global economy.

In Europe leaders are grappling with debt problems that threaten to spread from Greece, Ireland and Portugal to the much bigger economies of France and Spain. Commodities traders are concerned that if the debt problems spread, it would dampen demand for an array of commodities.

Meanwhile a dozen U.S. congressional leaders are working to produce a plan to cut the nation's deficit.

Silver and metals used for manufacturing all rose slightly on Monday.

In contracts for September delivery silver, which is used as a precious metal asset and in industrial production, added 19.3 cents to finish at $39.307 an ounce. Copper rose 2 cents to $4.032 a pound and palladium fell $1.85 to $746.35 an ounce. October platinum rose 50 cents to $1,797.20 an ounce.

In other trading, oil rose nearly 3 percent as stock markets rallied and new data showed Japan's economy contracted less than feared in the months after the March earthquake and tsunami.

Benchmark West Texas Intermediate crude gained $2.50 to finish at $87.88 per barrel on the New York Mercantile Exchange.

In other Nymex trading for September contracts, heating oil rose 4.04 cents to finish at $2.9441 per gallon, gasoline futures gained 5.23 cents to $2.8745 per gallon and natural gas lost 3.6 cents to $4.024 per 1,000 cubic feet.

Corn, wheat and soybeans also rose.

September wheat added 10 cents to finish at $7.125 a bushel, December corn gained 5.5 cents to end at $7.20 a bushel and November soybeans rose 16.5 cents to $13.5125 a bushel. - AP