US gold futures rose in choppy trade early on Friday, rebounding from a lower opening as the falling dollar prompted investors to buy the precious metal a day after it rallied above $650 an ounce. Hudson River Futures' Carlos Perez-Santalla said gold turned higher largely because of the weak dollar.
"It's also a new fiscal year for a few companies. People are starting to trade more aggressively than they had for the last two months," said Perez-Santalla. "So things are starting to shift to a better trading environment."
At 10:26 am EST (1526 GMT), benchmark February gold at the COMEX division of the New York Mercantile Exchange climbed up $1.10 an ounce at $654.00, trading in a range between $649.20 and $655.
The dollar extended losses after a report showed US manufacturing activity contracted in November. A soft greenback makes gold, which is priced in US dollars, more attractive for holders of other currencies. The February contract was trading lower early in the session and dipped as low as $649.2 before the dollar further declined on the release of the US economic data.
Despite hitting new lows against major currencies, the dollar did not fall or rise enough in the last two days to trigger fresh buying or profit taking for gold, said George Nickas, a futures broker at FC Stone. "The unemployment figures next Friday will probably be the next significant (data) for the market to trade around," Nickas said.
November US unemployment rate and non-farm payrolls are due 8:30 EST am (1330 GMT) on December 8. Spot gold bullion rose to $648.70/649.70 from $647.20/$648.20 in late trade on Thursday. Bullion dealers fixed London's afternoon spot reference price at $648.75. NYMEX March silver was up 9.5 cents at $14.210 an ounce, trading between $14.030 and $14.250.
Spot silver was up to $13.990/14.060 from $13.920/13.990 on Thursday. Friday's fix was $13.850. NYMEX January platinum fell $12.70 to $1,164.00 an ounce. Spot platinum fetched $1,153.00/1,168.00. NYMEX March palladium edged down 65 cents at $333.70 an ounce. Spot palladium traded at $325/330.