Gold futures gain on weak U.S. economic data

BY

Gold futures climbed Friday morning, lifting the February contract above $650 an ounce as weak U.S. economic figures implied a slowdown in the growth of the economy, lifting gold's attractiveness as a safe-have investment.


Gold for February delivery was last up 60 cents at $653.20 an ounce on the New York Mercantile Exchange. The December contract 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 continued to trade at 14-year lows against the British pound and a 20-month low against the euro following Friday's economic figures

The Institute for Supply Management's manufacturing index stood at 49.5% in November vs. 51.2% in October. The figure came in below expectations for a 51.8% November reading, and ignited 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.

Adding support for gold, spending on U.S. construction projects dropped by 1.0% in October, as outlays on private residential construction matched a low hit in July 2006, the Commerce Department said Friday.

kellylei

THX