Daily Gold Update

Source: MarketWatch

New York— Gold futures rose more than 5% Monday to end above $900 an ounce for the first time in seven weeks, as a massive government plan to rescue the financial sector pressured the U.S. dollar, increasing the metal's appeal as an alternative investment. Gold for December delivery rose $44.30, or 5.1%, to close at $909 an ounce on the Comex division of the New York Mercantile Exchange, ending above $900 for the fist time since Aug. 4. Other precious metals also moved higher. "The rally was sparked by a proposal that the government would create a massive reserve fund designed to soak up to $700 billion of mortgage instruments," said Edward Meir, a commodities analyst at futures brokerage MF Global.

The Bush administration proposed a plan over the weekend that would allow the government to buy the bad debt of U.S. financial institutions for the next two years. It gives the Treasury secretary authority to buy $700 billion in mortgage-related assets, and would raise the statutory limit on the national debt from $10.6 trillion to $11.3 trillion. The plan "has been largely dollar negative," said James Hughes, analyst at CMC Markets, as a higher debt will endanger the dollar's global position as a dominant currency. See full story.