Gold Prices Climb on Weaker U.S. Dollar (Update 1)

Updated from 10:26 a.m. EDT with settlement prices

NEW YORK (TheStreet) -- Gold prices rose Thursday as the U.S. dollar weakened against the euro.

Gold for December delivery added $5.50 to $1,770.60 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,776.60 and as low as $1,760.20 an ounce, while the spot price was gaining $5.30, according to Kitco's gold index.

Standard & Poor's knocked down Spain's debt rating by two notches late Wednesday, but the euro was ignoring that news and investors continued to be optimistic about the possibility of a bailout for the country.

"The S&P announcement on Spain probably has a lot to do with the return to the rally tracks," Chuck Butler, president of world markets at EverBank, wrote Thursday in a note.

Silver prices for December delivery closed down 3 cents at $34.08 an ounce, while the U.S. dollar index was lowering 0.41% to $79.77.

Gold was also shrugging off a week-long slump despite the better news that weekly jobless claims declined 30,000 for their biggest drop since July.

Investors have felt that good news in the labor market could signal a move by the Federal Reserve to end its open-ended, mortgage-backed securities purchasing program -- known as quantitative easing -- sooner rather than later. Despite last Friday's surprise drop in the unemployment rate and Thursday's decline in claims, gold is not seeing a charge toward the lower end of its current trading range.

"As discussed recently, I was cautious to short term bearish on gold based on overbought sentiment mainly. If it can hold 1753, it has a chance to spring back over 1800," David Banister, chief investment strategist at Active Trading Partners, wrote in an email.

The euro was climbing to $1.2934 against the greenback, ahead of its prior day close at $1.2876.

Gold mining stocks were mixed Thursday. Shares of NovaGold Resources (NG) were up 3.2%, while shares of Yamana Gold (AUY) were adding 2.1%.

Among other mining stocks, Kinross Gold (KGC) was losing 1.2%, and Barrick Gold (ABX) was down 0.42%.

Gold ETFs SPDR Gold Trust (GLD) and iShares Gold Trust (IAU) were rising 0.29% and 0.33%, respectively.

-- Written by Joe Deaux in New York.

>Contact by Email.

Follow @JoeDeaux