Traders also point to a Moody's report on the U.S. which appeared on a news wire around noon ET, and highlighted an "uncertain long-term outlook if reform of entitlement programs does not take place at some point." Traders say that sparked concern about the potential for a U.S. downgrade down the road.
Gold finished the session at $1,384.10 a troy ounce, up 1.4 percent, after hitting a session low of $1336.30 an ounce. Silver rose 1 percent to end at $22.58 a troy ounce, after sliding to a session low of $20.25 an ounce, its lowest level since September 2010. Barclays analysts say that on a technical basis, silver in the short term could follow gold lower to a $19.50 to $20 an ounce support level.
Silver became so volatile that the CME Group halted trading in the metal four times Sunday evening. Silver was down more than 9 percent in thin trading in the first few minutes of trading Sunday.
These momentary halts occur automatically, "giving the trading community the opportunity to provide additional liquidity so proper prices can be re-established and the market can regain it's equilibrium," according to a CME spokesman.
(Read More: The Level Gold Bulls Need to See)
RBC Capital Markets precious metals strategist George Gero says silver was suffering from lower gold prices, as well as lower industrial demand.
(Read More: Soros Cut Gold Holdings Before Crash)
Gero said gold started rallying as ETF products, like the SPDR Gold ETF GLD, led the metal higher. The dollar weakness was also a factor, and traders pointed to weekend comments from Japan's Economic Minister Akira Amari that further yen weakness could be harmful.
"The heavily oversold precious metals were not seeing offers as traders tried to cover previously sold positions prior to next week option expiration on 28th of the month.The large put position looks to be in the money and will add to open interest again after that prior to First Notice Day," Gero said in a quick note.
—By CNBC's Sharon Epperson. Follow her on Twitter: @sharon_epperson
Disclaimer
