Gold eases as dollar trades mixed

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Gold futures eased slightly early Friday, but held above the $640-an-ounce level as the dollar traded mixed, allowing traders to lock in some of the metal's recent gains.

Gold for December delivery was last down $3.20 at $643.70 an ounce on the New York Mercantile Exchange. The metal rallied to a 12-week high Thursday to gain almost 7% for the month as U.S. data renewed expectations that the economy is poised for a growth slowdown, hitting the dollar hard.

The dollar was mixed early Friday, holding at 14-year lows against the British pound and 20-month low against the euro. It was up 0.4% against the yen. See Currencies.

The February gold contract was more active than the front-month contract and was last down $2.30 at $650.60 an ounce.

Traders are now awaiting key data due for release at 10 a.m. Eastern. The Institute for Supply Management's survey of manufacturing sentiment will be closely watched after a regional survey released Thursday showed an unexpected contraction in the sector.

The Chicago Purchasing Managers Index yielded a reading below 50 for the first time in more than 3 1/2 years. If the ISM survey shows a similar reading, it would ignite fears the U.S. economy is tipping into a recession, likely boosting demand for gold. The Federal Reserve usually cuts interest rates when the ISM goes below 50.

Economists are however expecting the survey to rise to 51.8% from 51.2% in October.

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US ISM EMPLOYMENT INDEX 49.2 NOV VS. 50.8 OCT

ISM survey shows a reading below 50, it would ignite fears the U.S. economy is tipping into a recession, likely boosting demand for gold.