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Gold Settles Higher Ahead of Jobs Number

NEW YORK ( TheStreet ) -- Gold prices settled higher Thursday as investors bought the metal ahead of Friday's jobs number.

Gold for December delivery closed up $5.30 to $1,253.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,255.20 and as low as $1,245.30 on Thursday. The U.S. dollar index was rising slightly at $82.50 while the euro was flat at $1.28 vs. the dollar. The spot gold price Thursday was rising $7, according to Kitco's gold index.

The Dow Jones Industrial Average rose 254 points Wednesday and gold prices took a minor $2 hit lower for the day. The equity rally was stalling out Thursday as investors stayed cautious ahead of Friday's U.S. unemployment report and were tentatively adding to their gold positions.

Gold was also finding some support from the European Central Bank, as the eurozone's central bank left key interest rates at 1% and President Jean-Claude Trichet said that its short-term lending facilities will continue until early next year. The ECB also forecast that the eurozone would grow at a moderate rate between 1.4% to 1.8% in 2010, although the economic conditions are still uncertain. Trichet's comments were more upbeat but low rates means more euros in circulation, which supports gold's appeal as a form of currency that retains some value.

Most experts expect gold to trade in a tight range as prices wait for a catalyst. "There's a battle going on in the $1,250 area," says George Gero, vice president of global futures at RBC Capital Markets, "between the mining companies that sold the $1,250 calls and the funds that bought the $1,250 calls."

Even if gold is able to break its all-time intraday high of $1,264 an ounce, most analysts think the pop will be short-lived. Gold stands to suffer either way from Friday's jobs number. is expecting a loss of 106,000 jobs and a rise in the unemployment rate to 9.6%. The key number will be private sector hiring. The consensus is waffling anywhere from 10,000 to 44,000 jobs.

A better-than-expected reading would buoy stocks as investors correspondingly ditched safe haven assets like the U.S. dollar and gold. A worse reading could prompt a flight to safety into the metal but could also force traders to make margin calls; that is sell gold for cash. Weekly jobless claims for the week ended Aug. 28 dropped 6,000 to 472,000, which was in line. This is an indicator of September's unemployment report and won't factor into Friday's number, but it does set the tone among investors.

The recent safe-haven darlings are gold, U.S. dollar and U.S. Treasuries. Wednesday the U.S. dollar index sold off as did Treasuries. The yield on the 10-year bond rose to 2.57% as the government was forced to sweeten the pot for investors as sellers disappeared by raising the interest rate. The popular gold exchange-traded fund, the SPDR Gold Shares (GLD), on the other hand, added 1.5 tons on Wednesday even as shares closed 0.32% lower at $121.69.
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