Gold posts biggest daily gain since June, snaps 7-day losing streak

Reuters with CNBC
Source: World Gold Council

Gold settled more than 2 percent higher on Friday and posted its biggest one-day gain in nearly five months as a retreat in the U.S. dollar and heavy short-covering lifted bullion from an earlier 4-1/2 year low.

U.S. gold futures for December delivery settled $27.20, or 2.4 percent, higher at $1,169.80 an ounce. The metal logged its best daily gain since June 16 and snapped a seven-day losing streak.

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Spot gold, meanwhile, jumped 2.7 percent to $1,171 an ounce, having dropped to its lowest since April 2010 at $1,131.85 an ounce earlier on Friday.

However, the metal logged its third straight weekly loss.

The dollar slipped after a solid, but below-expectation, October U.S. jobs report as investors took profits on the greenback's months-long rally, which has seen it reach multi-year highs in anticipation of tighter U.S. monetary policy next year.

Market watchers said bullion could still extend its slide after tumbling below $1,180 an ounce, which was the lowest level reached during gold's 28 percent plunge last year.

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"After we've had such a big selloff, some speculators are covering their shorts after the worse-than-expected nonfarm number. I think that's all it is at this point," said Thomas Capalbo, precious metals trader at brokerage Newedge.

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Trading in gold was choppy in Asia. After subdued trading early on, U.S. gold futures slid 1 percent to $1,130.40 an ounce, their lowest level since March 2010, on high volumes. In the five minutes to 12:00 a.m., nearly 5,000 lots changed hands.

But at around 1:35 a.m., prices popped up about $10, again on high volumes.

Gold had been under pressure for a week from a rising dollar, which has benefited from expectations that the Fed will move before other central banks to tighten monetary policy.

Despite coming in below expectations, the payrolls report, however, showed the unemployment rate fell to a fresh six-year low, suggesting the U.S. economy remains on a strengthening path longer term.