By Claudia Assis and Laura Mandaro, MarketWatch
SAN FRANCISCO (MarketWatch) -- Gold futures gained nearly 1% Friday, on hopes talk of more fiscal union in Europe would pave the way for more central bank stimulus.
Gold for February delivery GC2G +0.51% , the most active contract, rose $16.50 an ounce, or 0.9%, to $1,756.50 an ounce on the Comex division of the New York Mercantile Exchange.
Gold had traded around $1,760 ahead of Friday’s U.S. Labor Department report on jobs, which showed the economy gained 120,000 jobs last month while the unemployment rate sank to 8.6%. Read story on jobs report.
“Gold traders and investors seem more optimistic about recovery, looking at jobs figures and euro-zone pronouncements and stimulus, and more important, the inflationary aspects of this,” wrote George Gero, precious metals strategist at RBC Capital Markets, in emailed comments.
In a closely watched speech Friday, German Chancellor Angela Merkel called for quick treaty changes that would lead to closer fiscal union in the 17-nation currency union. Read more on Merkel's speech.
European Central Bank President Mario Draghi on Thursday had hinted that a tighter fiscal union would open the door to more aggressive action by the ECB, which some analysts say could equate to more quantitative easing.
The precious metal, 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.
On Thursday, the contract had declined $10.50, or 0.6%, to $1,739.80 an ounce as investors weighed the impact on gold from a coordinated move by central banks to ease dollar funding flows. That move had sent stocks soaring on Wednesday. Read more on currencies.
The dollar index DXY +0.45% , which tracks the U.S. unit against a basket of six major currencies, provided some support earlier on for gold, but the index has since come off lows.
The index slipped to 78.484 on Friday, down from 78.293 in North American trade late Thursday.
Other metals tracked gold higher, with March silver SI2H -0.21% up 37 cents, or 1.1%, to $33.13 an ounce. March copper HG2F +1.43% rose 46 cents, or 1.3%, to $3.58 per pound.
