Gold rises but silver drops

Yellow metal registers first weekly gains in three weeks

Precious metals ended mixed on Friday, 02 December 2011 at Comex. Gold prices ended higher despite a strong dollar. Silver fell. Yellow metal prices rose on hopes of more central bank stimulus measures ahead of the euro zone summit. Gold and silver were trading up as much as 1.6% and 3.0% respectively before the rally in the dollar wiped away their strong gains.

Gold for February delivery ended higher by $11.5 or 0.7%, to end at $1,751.3 an ounce on the Comex division of the New York Mercantile Exchange on Friday. For the week, gold gained 3.9%. It was first weekly gain for gold in three weeks.



On Friday, silver prices for March delivery fell $0.07 or 0.21% to end at $32.69. For the week, silver gained 5.4%. For the month of November, silver lost 4.7%.

Data at Wall Street from the Labor Department showed that the U.S. economy created 120,000 jobs in November and the unemployment rate fell to 8.6%, its lowest level in more than two and a half years. The big drop in the jobless rate, which stood at 9.0% in October, stemmed mainly from a decline in the size of the labor force. Investors reacted positively to the report. The Dow Jones industrial average jumped as much as 125 points.

In the currency market on Friday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies rose by almost 0.3%.

Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa. But bullion metals have registered increase in prices despite strong dollar in recent times and vice versa.

European leaders meet next week, with France and German leaders meeting on Monday to iron out more details about how to staunch the euro-zone sovereign-debt crisis.

Gold, often used as a hedge against inflation, has doubled in price since the end of 2008 as investors perceived that the extraordinary measures taken by the Federal Reserve and other developed-world central banks to avert a financial crisis would devalue paper currencies, making hard assets more attractive.