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Aug. 3, 2012, 2:45 p.m. EDT

Gold gains on economic data, lower dollar

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By Claudia Assis, MarketWatch

SAN FRANCISCO (MarketWatch) — Gold futures rose Friday, snapping a three-day losing streak after U.S. employment data showed a rebound in hiring last month and as the dollar traded weaker.

Gold for December delivery /zigman2/quotes/210039517/delayed GCZ22 -0.10%  advanced $18.60, or 1.2%, to settle at $1,609.30 an ounce on the Comex division of the New York Mercantile Exchange. The metal declined 0.5% on the week, however.

/zigman2/quotes/210039517/delayed GCZ22 1,811.80, -1.90, -0.10%
Choppy, range-bound trading in gold.

“We are getting a lot of enthusiasm from the risk-on trade,” said James Cordier, a portfolio manager at Optionsellers.com.

Gold has been trading alongside other asset classes for the better part of two years, and with Friday’s positive macroeconomic data and the pop for U.S. stocks kept that trend going, he added.

Moreover, the metal was oversold after its losing spell, Cordier said.

Such losses came as the Federal Reserve and the European Central Bank leaders disappointed investors by not detailing any immediate plans to spur economic growth in the U.S. or curb the sovereign-debt crisis in the euro zone.

Some saw a silver lining, however.

“Given the disappointment at the ECB’s failure to act and the sharp fall in prices of other commodities, yesterday’s drop in the gold price was actually fairly moderate,” analysts at Commerzbank said in a note to clients.

“We see this as a sign of relative strength, and are still confident that the fears about the financial system, the geopolitical risks, the low and in some cases negative real interest rates, coupled with a ‘currency war’ and continued interest on the part of investors and central banks, create a positive environment for gold’s traditional role as capital protection,” they said.

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Dips below $1,600 an ounce are likely to be viewed as “an attractive opportunity to buy,” the analysts said, adding they foresee “a significant increase” in the price of gold during the second half of the year.

Meanwhile, U.S. employment outside the farm sector grew by 163,000 workers in July, the Labor Department said. That outpaced expectations of a rise of about 100,000 for nonfarm payrolls and was the fastest pace of job growth since February. Read more about payrolls.

U.S. services activity also accelerated in July, the Institute for Supply Management said Friday. See more about ISM services.

Also helping gold, the dollar traded lower. The ICE dollar index /zigman2/quotes/210598269/delayed DXY -0.21% , which compares the U.S. unit to a basket of six currencies, declined to 82.845 from 83.320 late Thursday.

A weaker dollar is a positive for gold and other dollar-denominated commodities as it makes them cheaper to holders of other currencies. For gold, it adds another layer of support since the metal is often viewed as an alternative to the currency.

The broader suite of metals tracked gold higher.

Silver for September delivery  rose 81 cents, or 3%, to settle at $27.80 an ounce. Silver rose 1.1% on the week.

September copper /zigman2/quotes/210058648/delayed HGU22 +1.15%  gained 8 cents, or 2.3%, to $3.37 a pound. Copper ended the week down nearly 2%, however.

October platinum  advanced $26.60, or 1.9%, to $1,414.40 an ounce. Sister metal palladium, for September delivery , gained $10.35, or 1.8%, to $578.20 an ounce.

Platinum advanced 0.4% on the week, while palladium rose 1.1%.

US : U.S.: Nymex
$ 1,811.80
-1.90 -0.10%
Volume: 40,880
Aug. 11, 2022 8:07a
US : U.S.: ICE Futures U.S.
-0.23 -0.21%
Volume: 0.00
Aug. 11, 2022 8:07a
US : U.S.: Nymex
$ 3.69
+0.04 +1.15%
Volume: 21,862
Aug. 11, 2022 8:07a

Claudia Assis is a San Francisco-based reporter for MarketWatch.

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