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Gold Prices Rise as Investors Cover Bets (Update1)

(Updated from 12:41 p.m. EDT with settlement prices.)

NEW YORK ( TheStreet) -- Gold prices rose Friday as traders looked to cover their short bets on unimpressive economic news from China and Canada.

Gold for December delivery increased $2.60 to settle at $1,622.80 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,629.70 and as low as $1,606.60 an ounce, while the spot price was climbing $2.45, according to Kitco's gold index.

"This morning when gold had reasons to break, it didn't break, so technical buyers came in and decided to get out of the market for the weekend," said George Gero, precious metals strategist at RBC Wealth Management.

Silver prices for September delivery fell 4 cents to settle at $28.06 an ounce, while the U.S. dollar index was down 0.07% to $82.54.

China's merchandise trade balance came in lower than expected as Canadian employment dropped by 30,400, two weak reports that weren't significant enough to push down gold, according to Gero.

"When a commodity refuses to break in the face of bad news or weak news ... that should move it down, traders will rush in and cover if it doesn't do that," said Gero.

Additionally, the euro continued to drop against the U.S. dollar to $1.229, down from the prior day's $1.231.

Open interest in gold has remained at one of its lowest levels in 2012 at around 390,000 orders, said Gero.

The Federal Reserve isn't expected to announce new monetary policy until late August, while the European Central Bank won't signal any moves until early September. Gold has seen a steady rise this week as very little macroeconomic news has broken to move the yellow metal decidedly in one direction.

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