Gold Prices Settle Near $1,200

NEW YORK (TheStreet ) -- Gold prices rose double digits Wednesday as investors prepared for disappointing jobs data and piled into gold as a safety net.

Gold for December delivery settled $8.40 to $1,195.90 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Wednesday has traded as high as $1,205.50 and as low as $1,187. The U.S. dollar index was rising 0.49% to $81.01 while the euro was down 0.56% at $1.31 vs. the dollar. The spot gold price Wednesday was rising more than $10, according to Kitco's gold index.

Gold prices finally broke free of a tight trading range Wednesday and pushed past $1,200 an ounce in intraday trading. Many analysts still cite $1,225 as a strong resistance area.

"Was this an oversold bounce ... or will it start a new trend?" asked Scott Redler, chief strategic officer at T3Live.com. "I think now is just a downtime for gold ... I do think that with a little bit more time we will have an upper level base and then in the fourth quarter if gold decides to break that down trend ... it's going to start moving again."

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Investors were buying gold as a safety net as worries surfaced about a weak U.S. unemployment report Friday. Wednesday's Automatic Data Processing report said that the private sector added 42,000 jobs in July, which analysts say is good but not good enough. The report is keeping investors jittery ahead of the Labor Department's nonfarm payroll report on Friday.

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Traders are also anticipating some move by the Federal Reserve when it releases its rate decision next week. Although rates are expected to stay between 0% and 0.25%, some analysts think the Fed might announce additional steps to boost liquidity in the market, a sign that a U.S. recovery has stalled. The Fed stopped buying Treasuries back in March and there are talks that it might resume lending money to the U.S., especially if unemployment remains high.

The more debt the Fed buys, the lower interest rates will be and the more money there will be in circulation. Already the yield on the 10-year Treasury note, a benchmark, is less than 2.91%. One fear is that this move will lead to a devalued dollar, which hit an eight-month low against the yen on Tuesday, and a lack of confidence in the U.S. economy. Gold is seen as an attractive alternative to paper currency as a form of money that retains more value against a declining dollar.