Gold futures on the COMEX Division of the New York Mercantile Exchange rebounded on Monday, as the Greek government said it will miss its deficit targets this year, increasing demand for the bullion as a safe-haven asset.

The most active gold contract for December delivery jumped 35.4 dollars, or 2.2 percent, to 1,657.7 dollars per ounce.

Greek Prime Minister George Papandreou said on Sunday that Greece will miss the 7.6-percent 2011-2012 deficit target that was agreed upon with EU/IMF lenders in July as a prerequisite for a second financial rescue package.

A trader noted that Greece's admission that it will miss its deficit targets for this year and next heavily weighed on risky assets on Monday, prompting investors to flee to the perceived safety of gold, amid increasing fears that the default would send a shock wave throughout the world financial system.

Some investors purchase gold on the belief that it holds its value better than other assets during economic turmoils. The recent sharp price correction also offered investors a good excuse to re-enter.

Gold price dropped 12 percent last month, marking the worst performance since October 2008.

Silver for December delivery added 71.2 cents, or 2.4 percent, to 30.795 dollars per ounce.