Gold finished slightly lower on Monday, posting its sixth straight negative close. The precious metal's hedge appeal was diminished as the U.S. dollar saw some strength against higher-yielding counterparts.
April-stamped gold futures dropped to $940 an ounce, losing $2.50 for the session. After floor trading closed, the metal continued to drop and hit a 2 1/2-week low of $921.
The metal lost $59.70 an ounce last week, giving back all of its gains from the prior week when it rallied above $1,000. On Feb. 20, gold touched as high as as $1,007.70 an ounce, its best level in 11 months.
The dollar consolidated its recent gains versus other major currencies on Monday in New York, cementing its safe haven status amid lingering concerns about the global financial meltdown.
In economic news, a Commerce Department report showed that personal income increased by 0.4 percent in January following a 0.2 percent decrease in December. The increase came as a surprise to economists, who had expected income to edge down 0.2 percent.
Meanwhile, the Commerce Department also reported personal spending rose by 0.6 percent in January after falling by 1.0 percent in December. Economists had been expecting spending to increase by about 0.4 percent.
Later, the ISM said that its index of activity in the manufacturing sector edged up to 35.8 in February from 35.6 in January, but a reading below 50 still indicates a contraction in the sector. Economists had been expecting the index to slip to a reading of 33.8.
Also, the Commerce Department reported showed that construction spending fell 3.3 percent to an annual rate of $986.2 billion in January from a revised December estimate of $1,020.0 billion. Economists had been expecting a more modest decrease of about 1.5 percent.
In the top corporate news of the day, American International Group (AIG) reported a fourth quarter net loss of $61.7 billion or $22.95 billion compared to a loss of $5.3 billion or $2.08 billion in the year-ago period.
Additionally, the U.S. Federal Reserve along with the U.S. Treasury announced a restructuring of the government's assistance to AIG.
