Gold turned sharply higher on Monday as weakness U.S. and European stock markets sent traders towards the safety of the precious metal. With the rally, gold erased its losses from last week.

June-dated gold futures rallied to $887.50, up $19.60 per ounce for the day.

The metal dropped $15.40 last week, its fourth straight weekly decline. On a longer-term basis, gold had been down more than 12% since briefly topping $1,000 in February.

The greenback moved higher against the euro and sterling as investors shied away from higher-yielding currencies. The dollar reached a five-week high against the euro and its best level in nearly three weeks against the sterling. Gold often moves opposite the dollar because of its hedge value.

On the economic front, the Conference Board said its leading economic index fell 0.3 percent in March following a revised 0.2 percent decrease in February. The agency noted that the index has not risen in the past nine months.

The economic calendar remains light tomorrow as traders await key housing reports later in the week. Instead, earnings news will attract attention with IBM (IBM) expected to report after the bell today and Merck (MRK) and Yahoo (YHOO) headlining tomorrow's calendar.

In the latest from earnings season, Bank of America is under pressure despite reporting fourth quarter earnings that exceeded analyst estimates, as the financial services giant also took a substantial $13.4 billion provision for loan losses.

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