Gold rises first day in 10 as dollar weakens
NEW YORK (MarketWatch) -- Gold futures rose on Friday, as a steep fall in the dollar encouraged investors to buy the precious metal following nine straight sessions of losses, gold's longest losing streak in eight years, which had shaved off more than $90 of its value.
Gold for December delivery rose $19, or 2.5%, to end at $764.50 an ounce on the Comex division of the New York Mercantile Exchange. Despite Friday's gain, gold ended the week down $38.3, or 4.8%.
In currency trading, a surprise drop in retail sales on Friday put further pressure on the dollar, with the U.S. currency already under pressure as hopes of a buyout for troubled investment firm Lehman Brothers reduced the need for risk aversion trades. See Currencies.
The dollar fell off its one-year high against the euro. The dollar index (DXY) , which tracks the value of the greenback against other major currencies, slid 1%.
A weakening greenback tends to push up dollar-denominated gold prices as it reduces the metal's appeal as an alternative commodity.
"There is little economic data that is positive for the dollar other than general weakness within other currencies," said David Beahm, vice president at precious metals retailer Blanchard & Co. "Long term the dollar will not be able to sustain its current increase."
Friday's economic data were indicating a weaker U.S. economy. Retail sales unexpectedly fell in August, the Commerce Department reported. See Economic Report.
The dollar's recent gain had sent gold down for nine straight sessions, its longest losing streak since May 2000. Some analysts said gold could bounce back as the dollar is expected to rebound given ongoing problems in the U.S. financial system.
Tobias Merath, head of commodity research at Credit Suisse, said gold could rise to $900 in the next few months.See related story.
Rounding out the action in metals futures, silver for December delivery added 2.3% to $10.80 an ounce, October platinum rose 5% to $1,210.50 an ounce, and December palladium gained 3.5% to $242.80 an ounce. Copper for December delivery rose nearly 2% to $3.19 a pound.
In spot trading, the London gold fixing price (38099902) used as a benchmark for gold to be delivered immediately, stood at $750.25 an ounce Friday afternoon, up $9.55 from Thursday afternoon.
Silver fixing stood at $10.80 an ounce, up 14 cents from the previous session.
On the equities side, the Amex Gold Bugs Index (HUI) jumped 10.5% to 290.45 points.
The SPDR Gold Trust (GLD) added 3.4% to close at $75.55, the iShare Gold Trust (IAU) climbed 3.5% to end at $75.58, the iShares Silver Trust ETF (SLV) rose 4.2% to close at $10.75 and the Market Vectors-Gold Miners ETF(GDX) surged 10.8% to end at $31.25.
Moming Zhou is a MarketWatch reporter, based in San Francisco.