NEW YORK ( TheStreet ) - Gold prices popped Thursday on speculation that a Greek referendum is dead, prime minister Papandreou is out and as the European Central Bank eased monetary policy.

Gold for December delivery closed up $35.50 at $1,765.10 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,768.30 and as low as $1,724 an ounce while the spot gold price was up $27, according to Kitco's gold index.

Silver prices settled up 55 cents at $34.49 an ounce while the U.S. dollar index was down 0.65% at $76.59.

Gold had a tepid start on Thursday, with profit takers vying with a weaker U.S. dollar, but rumors that a Greek referendum is off the table or that Prime Minister Papandreou will be forced to resign caused a pop in gold as the euro rallied, the dollar weakened and investors had less need for cash.

The European Central Bank also eased monetary policy by cutting interest rates by 0.25% to 1.25%. The ECB had started on a rate tightening cycle earlier this year, with the bank more concerned about inflation, currently at 3%, than growth. This is Mario Draghi's first meeting as president and he is changing Jean-Claude's Trichet's more hawkish stance. When inflation is higher than interest rates, cash in the bank is worth less and gold becomes more popular.



"Given the scale of the European and global debt crisis, the slowing U.S. and global economy and heightened macroeconomic, monetary and systemic risk -- a move back to $1,800 seems likely -- possibly in November," says Mark O'Byrne, CEO of GoldCorp, a bullion dealer.

But other experts are predicting a volatile ride for gold. "Traders are likely to remain cautious to the outcome of the G20 meetings as well as tomorrow U.S.' payrolls reading," says James Moore, research analyst at FastMarkets.com.

The list of uncertainties continues to grow. French President Sarkozy and German Chancellor Merkel give Greece an ultimatum as the G-20 kicks off its two-day meeting that the country get no more bailout money until it pledges to stay in the Eurozone -- Greece will stop being able to pay its bills by December; another socialist party member, Eva Kaili, resigns from the ruling party in Greece leaving Prime Minister Papandreou with only a one seat majority a day ahead of his confidence vote; AP reports that the opposition party walked out of the confidence vote debate and that they are pushing for new elections in 6 weeks; the Fed hints but doesn't commit to more quantitative easing; the U.S. is bracing for October's jobs data.

Gold will continue to be at the mercy of currency fluctuations as a weaker euro means a stronger dollar which makes gold more expensive to buy in other currencies, and vice versa. Any kind of pending disaster in Europe might also trigger a flight to safety into gold but also might force liquidation as investors are forced to cover losses in other assets.

Barclays thinks that the former has a chance of winning out for gold. "Market sentiment toward Europe continues to warrant some flight-to-safety behavior in the near term." Commerzbank also wrote in a recent note that "interest rates and therefore the opportunity costs of holding gold are still very low," meaning that persistent negative real interest rates leaves gold is the more attractive asset to own.

Investors will also stay on edge as the U.S. prepares to release October's jobs data. Expectations are that the private sector will add 117,000 jobs and 85,000 jobs overall while the unemployment rate stays pat at 9.1%, according to Briefing.com's consensus.

Wednesday's ADP employment report which said the private sector added 110,000 jobs last month has painted a more upbeat picture headed into jobs Friday. BMO Capital Markets warns that the survey has diverged from the private sector payroll figure "widely ... by an average of 62,000 in the past decade," but that it hasn't been the case in the past two months.

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