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NEW YORK (AP) -- Gold prices advanced Monday as investors cheered President-elect Barack Obama's plan to increase infrastructure spending to help boost the sagging economy.
Other commodities, including energy and agriculture futures, also rose.
Over the weekend, Obama announced plans for the largest U.S. public works spending program since the creation of the interstate highway system a half-century ago. Meanwhile, government officials in China plan to meet this week to discuss possible ways to expand the $586 billion stimulus plan enacted last month.
The news provided a welcome respite for investors dejected in recent months about evidence of a still-worsening economy. The fear among investors has been that a prolonged recession would sharply curtail global demand for raw materials. But it appears that investors have begun to take to heart the unprecedented moves by governments around the world to boost economic activity.
The announcement by Obama, combined with relief that some sort of resolution will soon be reached for the ailing U.S. auto industry, also helped lift stocks on Monday. The Dow Jones industrial average rallied 298 points to close at the 8,934.
In recent months, commodities have tended to follow the direction of stocks, as economic concerns dictated the movement of both markets.
"It's kind of an unraveling of the avoidance of risk that we've seen the past six months, 12 months," said Thom Calandra, natural resources analyst and chief columnist at Stockhouse.com. "We're saying we're willing to embrace risk."
"People are starting to play around with their dollars again," he said. "I think it's sustainable in the long run."
But not all analysts are convinced that commodities are poised for an extended rally.
"However promising today's action seems, the recent trend of deleveraging by speculative funds is not quite finished, despite what some overeager observers feel," wrote Jon Nadler, senior analyst at Kitco Bullion Dealers Montreal, in a research note. "Thus, commodities could still be manifesting false breakouts while giving short-term players some isolated opportunities to make a buck."
Gold for February delivery rose $17.10 to settle at $769.30 an ounce on the New York Mercantile Exchange.
Other precious metals prices also rose. March silver gained 54.5 cents to $9.9750 an ounce, while March copper futures added 12.45 cents to $1.4980 a pound.
The dollar fell against other major currencies, including the euro and the British pound. Bond prices also fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.74 percent from 2.70 percent late Friday.
Oil prices came off their four-year lows, rising on the Nymex as the Organization of the Petroleum Exporting Countries said it may announce a "severe" production cut at its next meeting on Dec. 17 in Algeria.
Light, sweet crude for January delivery gained $2.90 to settle at $43.71 a barrel.
In other Nymex trading, gasoline futures rose 9.62 cents to settle at 96.18 cents a gallon, and heating oil gained 6.4 cents to $1.49 a gallon.
Grain prices rallied on the Chicago Board of Trade.
March wheat futures rose 15 cents to $4.9050 a bushel, while March corn futures gained 20.75 cents to $3.30 a bushel.
January soybeans jumped 37 cents to $8.2050 a bushel.
