Gold Prices Climb More Than 1% on Safe-Haven Buying

Gold prices climbed from eastern Asia to Western Europe Monday as worries about Europe's sovereign debt crisis spreading to Italy offset news that Greece's prime minister will resign.

George Papandreou offered to resign Sunday after his shock call last week for Greeks to vote on whether to let the European Union save the nation from default. Presumably his successor will be able to work with the EU and the International Monetary Fund towards what is being termed an orderly default.

Such encouragement as Papandreou's imminent resignation produced among traders early Monday was offset by growing fears that Italy is close to taking Greece's place as the next nation in need of a rescue.

However, Italy's economy - Europe's third largest -- is much larger than Greece's and the consequences of an Italian default could be catastrophic.

Already the interest rate on Italy's 10-year notes was closing in on seven percent, a sign bond traders are starting to price Italian bonds at a level that reflects Rome's inability to manage its debt-to-GDP ratio, now at about 120 percent.

Besides soaring yields on Italian bonds, investor pessimism about Europe's future emerged in currency markets where the euro fell against the dollar and the yen.

Asian stocks and European stocks were all lower. In the U.S., futures on the Dow Jones Industrial Average, the Nasdaq 100 and the S&P 500 were all pointing to a lower start to the week's trading.

Gold prices were posting gains of one percent or more in Asian and European trading.

On the Comex, gold for December delivery surged $20.10 to $1,776.20 and cash gold jumped $23.99 to $1,778.41.

Silver added 47 cents to $34.56, and cash silver rose 50 cents to $34.64.