Gold Prices Pop Past $1,200

Gold prices settled over $1,200 an ounce as traders digested the weak U.S. unemployment report for July.
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NEW YORK (

TheStreet

) --

Gold prices

popped Friday as investors digested the Labor Department's disappointing jobs number for July.

Gold for December delivery settled $6 higher to $1,205.30 an ounce at the Comex division of the New York Mercantile Exchange. The gold price today has traded as high as $1,213.30 and as low as $1,194.50. The

U.S. dollar index

was losing 0.57% to $80.36 while the euro was higher by 0.71% to $1.32 vs. the dollar. The spot gold price Friday was rising more than $10, according to Kitco's gold index.

Gold prices were popping Friday as investors hedged their portfolios on the back of a weak U.S. unemployment report for July. The Labor Department said there were 131,000 jobs lost in July, and the private sector added only 71,000, while expectations had been for 100,000. The weaker reading spearheaded a flight to safety into gold and out of stocks.

Gold prices sold off slightly before the report as traders took profits in the metal, which rose 1.3% this week, but they climbed steadily past $1,200 after the weaker reading. Many investors also prefer cash or gold headed into summer weekends in order to protect themselves against any headline risk.

After four session, gold prices finally settled above the key $1,200 area

. Nevertheless, many analysts are dubious about gold's rally and expect the upside to be short lived.

"

Can we overcome $1,210-$1,220 ... or will gains be capped by ebbing physical demand," asks Jon Nadler, senior analyst at Kitco.com. Nadler is still forecasting a tight range of $1,160 to $1,220 an ounce.

The summer months are traditionally a seasonally slow buying period for physical gold, which means lower prices, as the lack of festivals in China and India leave little reason for their consumers to buy gold jewelry. However, Nadler says that Indian consumers have been buying gold at or below $1,180, but as prices float above that level Nadler says demand cuts off. Festival season starts in three weeks for India, which may force gold buying. "So the calendar may in fact end up dictating

what happens in the bazaars," says Nadler. "But for the moment they are holding out for lower prices."

Video: Is India Buying Gold? >>

On the flip side, speculative fund-buying actually picks up above $1,190 as traders jump into the gold trade not wanting to miss a run past the $1,200 level. Gold prices will probably need both strong investment and physical demand to push prices out of their tight trading range.

Silver prices

settled up 15 cents at $18.47 while copper closed down 1 cent to $3.34.

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Gold mining stocks, an alternative way to

invest in gold

, were mixed.

Agnico-Eagle

(AEM) - Get Report

was up 1.35% to $59.47 while

Eldorado Gold

(EGO) - Get Report

added 0.82% to $17.25. Other gold stocks

New Gold

(NGD) - Get Report

and

Gold Fields

(GFI) - Get Report

were trading lower at $5.50 and $13.92, respectively.

--

Written by Alix Steel in New York.

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