Updated from 12:34 p.m. EDT

Gold investors failed to find much salvation in the September jobs report.

The price of gold bullion ended the week lower, with a strengthening dollar keeping a lid on any attempt at a rally as investors decided the economy is slowing, but still growing enough to avoid a recession.

The Labor Department says the U.S. economy created only 51,000 jobs in September, compared with the consensus forecast of 120,000. However, the government also made an upward revision to the August report, saying there were now 188,000 jobs created two months ago, up from the previously announced 128,000.

Meanwhile, the September unemployment rate fell to 4.6%, down from 4.7% in August. Analysts had been expecting the unemployment rate to remain unchanged.

"When you look at the jobs data and the back month data revisions, it's largely a wash," says Marc Chandler, chief currency strategist at Brown Brothers Harriman and a



Chandler says the employment numbers are indicative of a fairly robust economy and not one headed for a recession. He says the September report "reduces the chances of a rate cut'' by the

Federal Reserve

in the coming months, as some on Wall Street have speculated about.

Currency traders reacted to the news by marking up the dollar, which was buying 118.96 yen, compared to 117.66 yen late Thursday. It was also gaining against the euro, which was trading at $1.2584 vs. $1.2694.

Gold for immediate delivery was selling at $572.20 an ounce recently, down from $602 at the beginning of the week, reflecting a broader dollar rally over the past few days. Bullion prices tend to move inversely with changes in the price of the dollar.

December dated gold contacts closed at $576.80 on the Comex division of the New York Mercantile Exchange, $1.30 higher for the day after morning weakness. The exchange-traded funds that track the sector followed suit: shares of

streetTracks Gold Shares

(GLD) - Get Report


iShares Comex Gold Trust

(IAU) - Get Report

were virtually unchanged.

Separately, the Economic Cycle Research Institute says its Future Inflation Gauge dropped to 120.3 in September, marking a 14-month low. That compares to an August figure of 121.7, and the prospect of reduced fears of inflation may be reducing gold's allure as an inflation hedge.

"The downturn has become somewhat pronounced and begins to give evidence that perhaps the Fed will have more wiggle room in easing monetary policy," says Lakshman Achuthan, managing director at ECRI.

"Gold is at times influenced by the outlook for inflation, however as a leading indicator it can be erratic because of periods of speculation," Achuthan adds.

At the retail level, New Orleans-based coin dealer Blanchard says the dip in prices has brought out the buyers, with last week marking one of the firm's strongest weeks for bullion sales in the past 12 months.

Among the precious metals miners, Matrix Research increased its stock rating on

Newmont Mining

(NEM) - Get Report

to buy from hold. Shares were up 0.5% in the afternoon.

In base metals, Comex copper contracts for December delivery closed up 8.85 cents at $3.3885 a pound.

Meanwhile, Mitsui Bussan Commodities says it expects copper prices to dip in 2007 to end the year at $2.61 a pound in the spot market, and will average $2.83 for the whole year.

The futures broker predicts a slight surplus for copper and notes that "tidal wave" of hedge funds might "balk at negative returns," and bail out of their positions.

Across the broader metals complex Mitsui is forecasting that supply will run slightly ahead of demand during the second half of 2007.

Among the major metal producers, Prudential Equity Group upped its ratings on

Freeport McMoRan Copper & Gold

(FCX) - Get Report


Rio Tinto


to overweight from neutral.

Prudential also reiterated its overweight rating on U.S. copper miner

Phelps Dodge

(PD) - Get Report

and hiked the stock price target to $170 from $110. The brokerage continues to recommend underweighting behemoth


(BHP) - Get Report