MW: Gold gains over $37 for the day, up 1.1% on week
Grim economic news fuels gains; silver leads other metals higher
SAN FRANCISCO (MarketWatch) -- Gold futures climbed more than $37 an ounce Friday to gain 1.1% for the week as bleak global economic news and losses on Wall Street combined to boost the metal's investment appeal.
Gold for December delivery closed at $742.50 an ounce on the Comex division of the New York Mercantile Exchange, up $37.50, or 5.3%, for the session.
But gold isn't a stranger to big daily climbs. The front-month futures contract made daily gains of more than $40 three times in September.
December gold tapped a high of $754 an ounce on Globex Friday, and finished the week's trading with a 1.1% gain.
Also Friday, silver futures jumped 8%, platinum was up 4% and copper soared 5%.
"On the heels of poor retail numbers, gold took off to the races," said Jon Nadler, senior analyst at Kitco Bullion Dealers. "Gold may or may not be factoring in additional rate cuts at this juncture, but the more likely explanation is that a U.S. hedge fund may have dipped some sizeable toes into the gold market's waters."
On Thursday, gold fell $13.30, or 1.9%, to close at $705 an ounce on the Comex division of the New York Mercantile Exchange.
"Global economic data continue to point to an ongoing deterioration in the global outlook," said currency strategists at Brown Brothers Harriman. "That does not bode well for equities and should continue to encourage the deleveraging process."
Data weigh
The Commerce Department estimated Friday that U.S. retail sales plunged by a record 2.8% in October as sales of autos and gasoline plummeted. Excluding the 5.5% drop in auto purchases, retail sales fell 2.2%. See Economic Report.
The figures were worse than expected, with economists surveyed by MarketWatch looking for the headline sales number to fall 2.3% and sales excluding autos expected to drop 1.7%.
U.S. consumer sentiment ticked higher in early November from the prior month, but it remains at relatively low levels, according to a media report on the University of Michigan/Reuters index. See full story.
Against this backdrop, prices for other metals closed higher, led by strength in silver.
December silver rose 69 cents, or 7.8%, to close at $9.49 an ounce. January platinum futures gained $32.10, or 4%, to close at $845.10 an ounce and December palladium added $2.70 to finish at $216.65 an ounce. December copper rose 8.4 cents, or 5.2%, to end at $1.708 a pound.
On Wall Street, U.S. stock futures fell sharply on doubts whether the explosive gains seen Thursday can be sustained amid signs of a deteriorating world economy. See Market Snapshot.
The euro was under pressure Friday, losing ground against the dollar and other major counterparts as data confirmed expectations the 15-nation euro zone had tumbled into recession for the first time since the single currency's introduction nearly 10 years ago.
The region's third-quarter gross domestic product shrank 0.2% compared to the previous quarter, according to the statistical agency Eurostat. The second quarter also saw a 0.2% decline.
Dollar drive
Movements in the dollar have also been an obvious key driver for gold.
"The major driving force in the gold market over the past day has been the drop of the U.S. dollar versus the euro," said Peter Spina, an analyst at GoldSeek.com. Gold neared "some terrific support around $700 and with the strength in the euro, it helped to motivate upside momentum."
The dollar index , which tracks the performance of the greenback against a basket of currencies, stood at 87.463 Friday, up a bit compared with 86.445 in North American activity late Thursday. However, the dollar lost ground against the Japanese yen.
"Although gold and silver are off their respective highs, they have been able to rally in the face of a stronger dollar," said Dale Doelling, chief market technician at Trends In Commodities.
If this divergence continues, "it would signal that the precious metals are once again becoming a safe-haven for investors -- which would mean that continued deterioration of the economy is likely," he said in emailed comments.
Looking further ahead, Spina said "true long-term fundamentals do not support a strong U.S. dollar and as it begins to once again return back to its long-term secular bear market, the gold price will accelerate its appeal among dollar, euro and other paper currency holders."
"We are just entering into the next stage of the global currency crisis which will ultimately drive gold prices significantly higher over the coming months and years," he said in emailed comments.
Metals equities moved mainly in tune with the broader market rally. The Amex Gold Bugs Index which tracks the share prices of major gold companies, shed 6.1% to close at 186.43.
The iShares Gold Trust closed at $73.37, up 1.3% and the iShares Silver Trust ETF tacked on 0.6% to end at $9.36. But the Market Vectors-Gold Miners ETF lost 5.1% to close at $20.55.
