NEW YORK ( TheStreet ) -- Gold prices closed lower Friday after a roller coaster day as stocks see-sawed despite a better-than-expected read on the labor market for July.

Gold for December close down $7.20 to $1,651.80, an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,673 and as low as $1,644.20 while the spot gold price was adding $4.50, according to Kitco's gold index.

Silver prices were down $1.20 to settle at $38.21 an ounce. The U.S. dollar index was down 0.96% at $74.58 while the euro was adding 1.11% vs. the dollar.

Gold prices had a wild and crazy day Friday after being caught in a flood of selling Thursday as investors fled all assets. Gold then mounted a solid rally Friday as investors searched for a safe haven after July's jobs report only to lose steam into the close.

On the surface the jobs news was good, which caused gold to give up some early morning gains, but the number wasn't enough to buoy investor sentiment for long. The U.S. economy added 117,000 jobs, 154,000 private sector jobs and the unemployment rate fell to 9.1%.



Although better than expected, there are still 14 million unemployed people in the U.S. and other data points to slowing growth, like weaker manufacturing figures and lousy GDP numbers.

As a result, talk of recession has emerged once again. Plummeting stocks aren't enough to signal a recession but lower stocks, lower growth, lower manufacturing activity and higher unemployment "add to existing concerns," according to a report from Sam Stovall, Standard & Poor's chief investment strategist.

These worries go a long way to higher gold prices. After June's dismal jobs report, gold prices rose $14 on the spot market. That theory didn't pan out Friday, however, as gold sold off on news that Italy would implement austerity measures sooner than expected and speed up fiscal consolidation to balance the budget by 2013, igniting a late-day rally in stocks.

The European Central Bank might now buy Italian and Spanish bonds, desperately needed as the countries' borrowing costs are soaring, as the governments seriously tackle debt issues. The Italian Prime Minister has been in contact with his counterparts from Spain, Germany and France including Angela Merkel and Nicholas Sarkozy. Investors were cheered by EU's ability to tackle debt issues and dumped gold for stocks.

"I think the whole world was looking at the $1,680 level ," says Dave Kavanagh, CEO of Grant Park Fund, who thinks gold could sell off further in the short term.

Kavanagh said if the dollar rallies, then gold could sell off as much as 10% from its intraday record, which would take gold to about $1,484 an ounce. "Does that mean the run in gold is over? Absolutely not," he said. The dollar could rally on short-covering and technical trading, according to Kavanagh, but that long-term it's not any better than other fiat currencies, which leaves gold as the only real form of money.

"I still think there is substantial percentage upside in gold ... I think there is nowhere else to put money right now," argues Kavanagh.

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