Updated from 10:16 a.m. ET with closing prices and corrected information on Lehman Brothers' bankruptcy

NEW YORK ( TheStreet) -- Gold prices gained Monday after President Obama said Larry Summers withdrew his name from consideration to be the next Federal Reserve chairman.

For weeks, reports citing unnamed sources within the Obama administration said Summers, the former director of the National Economic Council, was the front-runner to succeed Chairman Ben Bernanke. As late as Friday, a report out of Japan emerged saying Obama had planned to nominate Summers.

Gold for December delivery at the COMEX division of the New York Mercantile Exchange added $9.20 to $1,317.80 an ounce. The gold price traded as high as $1,336 and as low as $1,307.20 an ounce, while the spot price was falling $20.90.

Many market participants had viewed a Summers nomination as a shift toward tighter monetary policy and narrower leadership in the Federal Open Market Committee. Chairman Ben Bernanke gained a reputation through the 2008 financial crisis and beyond for his ability to garner consensus on monetary policy among disparate voting members.

Gold prices are up nearly 70% since Lehman Brothers' collapse on Sept. 15, 2008, five years ago. Many investors and analysts say the Fed's economic stimulus programs led to unprecedented gains for the yellow metal as monetary stimulus was viewed as a hedge against inflation.

"With Summers withdrawing his nomination, the possibility of Janet Yellen steps up front and center, and she is seen as more dovish," Phil Streible, senior commodities broker at RJO Futures, said in an interview. "So we saw an initial pop."

Silver prices for December delivery gained 29 cents to $22.01 an ounce, while the U.S. dollar index was off 0.29% to $81.28.

Most investors will turn their attention to the Fed's policy-making statement due Wednesday afternoon as economists have said the FOMC will announce a draw down in its monthly asset purchases.

Such a move could be short-term negative for gold but it does not signal an end to the Fed's economic stimulus program.

Gold mining stocks closed mixed on Monday. Shares of NovaGold Resources ( NG) tumbled 6.2%, while shares of AngloGold Ashanti ( AU) rose 2.7%.

Gold ETF SPDR Gold Trust ( GLD) dropped 0.08% to $126.35 a share, while iShares Gold Trust ( IAU) dipped 0.55% to $12.65 a share.

-- Written by Joe Deaux in New York.

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