Gold prices retreat as investors’ cash in on gains

Gold had rallied 6 percent last week to close above $1,000 an ounce for the first time since last March. The decline came amid steep losses in stocks on growing pessimism over the economy and the government’s ability to pull the country out of recession.

Major stock indexes dropped to their lowest levels in nearly 12 years Monday even as the government pledged renewed support for the troubled banking system.

The Treasury Department and other agencies said they will launch a revamped bank rescue program that includes the option of increasing government ownership in financial institutions without using additional taxpayer money. Investors remain fearful that the government could move to nationalize the banks, despite its insistence that it wants to avoid such an approach.

The Dow Jones industrials fell 250.89 points to finish at 7114.78. The Standard & Poor’s 500 index, meanwhile, dropped 26.72 points to 743.33.

Despite gold’s dip on Monday, analysts largely expect the metal to continue an upward climb for some time, benefiting from the turmoil on Wall Street.

“The lack of confidence should maintain pressure on equities,” wrote Tom Pawlicki, an analyst with MF Global, in a research note Monday. “We don’t see the causes of the safe haven demand abating, as investors seek capital preservation.”

Gold for April delivery fell $7.20 to settle at $995 an ounce on the New York Mercantile Exchange.

Other metals were mixed. March silver fell 4 cents to $14.45 an ounce, while May copper futures gained 1.8 cents to $1.4510 a pound.

The dollar was mixed against other major currencies Monday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was unchanged from late Friday at 2.79 percent.

Energy prices suffered along with stocks, despite early reports that the Organization of Petroleum Exporting Countries had slashed production as promised.

Light, sweet crude for April delivery fell 4 percent, or $1.59, to settle at $38.44 a barrel. Gasoline futures fell 3.5 cents to $1.0395 and heating oil fell 2.5 cents to $1.1714 a gallon.

Grain prices were mixed on the Chicago Board of Trade.

May wheat futures fell 9 cents to $5.2150 a bushel, while corn for May delivery added 1.75 cents to $3.6075 a bushel.

The May soybean contract rose 12.75 cents to $8.76 a bushel.