(RTTNews) - Gold turned lower Tuesday in early trading as traders considered the government's latest measure aimed at controlling the impact of the recent financial turmoil. December gold moved to $839.40, down $3.10 on the session. The metal had climbed as high as $857.40 in electronic trading.
The U.S. government will buy equity stakes in many of the nation's largest banks, President George Bush announced. In another action, the president said the FDIC will guarantee most new debt issues by insured banks. In addition, the Fed is finalizing a plan to be the buyer of last resort for commercial paper.
Reports out of Washington earlier in the morning said that government will use up to $250 billion of the $700 billion authorized by the financial system rescue plan in order to make the bank equity purchases.
On the news, the dollar was mixed versus other major currencies Tuesday morning in New York, giving up ground versus the euro and sterling while gaining on the lower-yielding yen.
Gold prices dropped on Monday as confidence in liquidation efforts in the U.S. and Euro reduced the need for the hedge investment. Gold climbed to its highest level in more than two months last week as the ongoing financial turmoil took markets sharply lower.
In other metal trading, December silver added 28 cents to $11.07 an ounce and December copper increased by 19.25 cents to $2.505.
In energy trading, crude oil for November delivery moved higher again and continued to reclaim some of last week's sharp losses. The rally took oil off its yearly low from Friday as crude closed last week down more than $12 a barrel. Crude has still lost more than 40% from its record $147.27 from July 11 and has fallen nearly $30 since November became the front-month contract late last month.
Meanwhile, November natural gas added 10 cents to $6.7880 and heating oil for November moved to $2.3974, up 5.64.
