Reuters
Gold, silver up over 2 pct on US financial jitters
09.14.08, 9:39 PM ET

Australia - (Updates prices, adds quotes)

SINGAPORE, Sept 15 (Reuters) - Gold and silver gained more than 2 percent on Monday, buoyed by growing concerns about brokerage firm Lehman Brothers (nyse: LEH - news - people ) and the stability of U.S. financial markets.

Gold rose 2.3 percent or $17.40 to $780.85 an ounce at 0055 GMT from Friday's nominal close in New York. Silver gained 2.4 percent or 26 cents to $11.09.

News that talks to rescue Lehman Brothers Holdings faltered, fuelled concerns about the stability of the U.S. financial system and sparking talk of a possible rate cut there, boosting gold's safe-haven appeal.

That also put pressure on the dollar, which saw its biggest one-day decline against the euro in six months on Friday

"Gold's price response today looks like safe-haven behaviour The Lehman story is dominating markets, while bullion is probably getting a bit of a lift from the dollar," Gerard Burg, an analyst at National Australia Bank (nyse: NAB - news - people ), said.

"But the longer term is still bearish. In relative terms gold has been pretty soft as the dollar strengthened. Also Indian demand looks comparatively weak and the gold market can't live without India."

As Lehman's woes simmer, problems with other big Wall Street names could be brewing.

Insurance giant AIG (nyse: AIG - news - people ) was reported to be seeking around $15 billion in extra capital to stave off ratings downgrades.

But CNBC reports that Bank of America (nyse: BAC - news - people ) has agreed to buy Merrill Lynch (nyse: MER - news - people ) took a little of the uncertainty out of the market.

Oil fell 1.3 percent to $99.92 a barrel and earlier touched $98.46, its lowest since Feb. 26, as dealers bet on a swift recovery in U.S. energy production after former Hurricane Ike moved inland and the government loaned oil to two refiners.

Asian markets including the Tokyo Commodity Exchange and markets in China and Hong Kong were closed for holidays.

Gold futures for December delivery on the COMEX division of the New York Mercantile Exchange rose $21.5 or 2.9 percent an ounce to $786.3.

Spot platinum was flat at $1,202 an ounce from Friday.

Spot palladium rose $1 to $243.50 an ounce. Precious metals prices at 0055 GMT Spot Gold 780.85 17.40 +2.28 -6.23 Spot Silver 11.09 0.26 +2.40 -24.92 Spot Platinum 1202.50 0.00 +0.00 -20.89 Spot Palladium 243.50 1.00 +0.41 -33.83 Euro/Dollar 1.4315 Dollar/Yen 106.22 Spot prices in $ per ounce. (Editing by Ben Tan)

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