Gold futures end higher as dollar declines

Gold settled higher on Monday at its highest level in a week on a falling dollar. The days gains were building on momentum from Friday's gains after a stronger-than-expected jobs report. Even with a positive jobs report, unemployment still rose from 8.2% to 8.3%.

By Claudia Assis and William L. Watts
Aug. 6, 2012, 3:14 p.m. EDT
Market Watch

SAN FRANCISCO (MarketWatch) — Gold futures settled Monday at their highest level in a week as investors weighed the implications of the stronger-than-expected growth in U.S. jobs, and as the dollar declined.

Gold for December delivery GCZ2 -0.16% advanced $6.90, or 0.4%, to end at $1,616.20 an ounce on the Comex division of the New York Mercantile Exchange.

Momentum from Friday’s gains was carrying the day, said Rohit Savant, an analyst with CPM Group in New York.

CPM Group expects gold prices to average $1,640 an ounce for the year.

Gold futures snapped a three-day losing streak to post a winning session Friday after data showed the U.S. economy added 163,000 nonfarm jobs in July, topping the average forecast of a rise of 100,000. The unemployment rate, however, edged up to 8.3% from 8.2%.

Stronger economic data is a double-edged sword for gold, strategists at Credit Suisse wrote in a research note.

The dollar “tends to depreciate after good economic data due to reduced safe-haven flows. That is positive for gold,” they said.

Good economic data, however, “means that there is a lower probability of further monetary easing, which is negative for gold. We think the most likely outcome for this week is sideways trading.”

The dollar index DXY -0.05% , which measures the U.S. unit against a basket of six major rivals, declined to 82.186 from 82.39 in North American trades late Friday.

The broader suite of metals futures was mixed, with silver and copper reverting to gains. September silver futures SIU2 -0.14% rose 6 cents, or 0.2%, to $27.86 an ounce.

September copper futures HGU2 -0.34% gained 2 cents, or 0.6%, to $3.39 a pound. October platinum PLV2 -1.02% kept its losses, off $12.50 an ounce, or 0.9%, to settle at $1,401.90 an ounce. September palladium PAU2 +0.26% rose $1.35, or 0.2%, to $579.55 an ounce.

Meanwhile, the world’s largest exchange-traded fund, SPDR Gold Trust GLD +0.03% , reported inflows of 3 metric tons as of Friday. The fund had suffered declines in tonnage, but on Friday had 1,255 metric tons held in trust, from 1,249 the prior week.

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