NEW YORK |
NEW YORK (Reuters) - Gold rose almost 2 percent on Friday, rising above $1,400 an ounce as the dollar tumbled after disappointing jobs data cast doubt on the strength of the U.S. economic recovery.
Bullion was up more than 3 percent this week, its biggest gain since April, pushed higher by lingering fears about a sprawling European debt crisis and fund buying in commodities across the board.
The Reuters/Jefferies CRB index .CRB, a gauge of commodities performance, rose 5 percent, its biggest gain since October 2009.
Gold breached above $1,400 for the first time since November after data showed U.S. nonfarm payrolls barely grew in November and the jobless rate unexpectedly hit a seven-month high.
"The employment data today makes it more likely that the U.S. Congress is going to have to extend unemployment insurance and the tax cuts. The market sees that as more deficits spending, creating a more positive atmosphere for gold because the dollar is going down on it," said Tom Pawlicki, precious metals and energy analyst at MF Global.
Pawlicki said the job report hardened the view that the Federal Reserve would stick to or even extend its $600 billion bond-buyback program to stimulate growth.
The White House said the November unemployment data underscored the importance of extending tax cuts for middle-class Americans and unemployment insurance.
Economists said the weak jobs report could give fresh impetus to get a deal done, as expiry of the tax cuts without offsetting stimulus elsewhere could deal a hard blow to the economy.
Spot gold rose 1.7 percent to $1,408.19 an ounce at 3:01 p.m. EDT (2001 GMT), its biggest one-day rise since November 4.
U.S. gold futures for December delivery settled up $16.90 an ounce at $1,406.2.
Silver tracked gold higher, trading up 2.7 percent at $29.29 an ounce
COMEX gold and silver volume was sharply lower than their 30-day average, as investors have completed contract rollover prior to December's first notice day on Tuesday.
Earlier this week, gold seemed to struggle to gain upward momentum for a new test of its record high at $1,424.10 an ounce set on November 9, in spite of lingering worries that Europe's debt crisis could spread to other countries following bailouts of Ireland and Greece.
But weak U.S. data has given new momentum to gold.
"It indicates we are not out of the woods yet in terms of what direction the U.S. economy is going to be heading," said Saxo Bank analyst Ole Hansen.
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