Gold breaks $1,100
The precious metal rallies after the U.S. government says the nation's unemployment rate surged to 10.2% in October.
 |
| Click the chart for current gold prices. |
NEW YORK (CNNMoney.com) -- Gold powered through $1,100 an ounce Friday after the U.S. government said the nation's unemployment rate rose more than expected last month, fueling demand for the metal as a safe haven.
December gold jumped $6.40 and settled at 1,095.70 an ounce after surging to an all-time high of $1,101.90 an ounce earlier.
Prices spiked after the Labor Department said the unemployment rate rose to 10.2% in October from 9.8% the month before. That marks the highest level since April 1983. Economists had forecast an increase to 9.9%.
Gold rally to continue. Gold is benefiting from a "flight to quality," said Adam Klopfenstein, senior market strategist at commodities brokerage firm Lind-Waldock.
He said investors who were expecting an economic recovery "threw in the towel" after the jobs report. At the same time, investors who think the economy will continue to worsen "want to own something tangible."
"It looks like the market is giving gold the green light regardless of what's going on in equities or the currency markets," he said.
Gold could come under pressure as investors book profits following the push above $1,100, but the market has a "bullish fundamental case," Klopfenstein said.
Prices have soared 5% this week amid speculation that overseas central banks may be moving toward buying more gold as they look for ways to reduce their exposure to the U.S. dollar -- the traditional reserve currency of choice for many of those foreign central banks.
The weak greenback also makes commodities that are priced in dollars, such as gold and crude oil, more appealing for investors using other currencies. As a result, gold often rises when the dollar weakens.
Many analysts say this week's rally has been driven by speculative investors who trade based on momentum.
"The gold market is something a lot of speculative and institutional investors are looking at," said Adrian Ash, head of research BullionVault.com. "You've got low interest rates and horrible economic data, for a lot of institutional investors gold is a no brainer." 
-
Homeowners would be reimbursed $12,000 for energy-efficient appliances and insulation. More -
Consumers looking to buy electronics for holiday gifts won't have to break the bank this season. More -
These 5 cut up their cards and live on a cash-only diet. Here's how they make it work and stay debt free. More -
As homeowners struggle to sell their homes, many are deciding to invest in what they already love. More -
Meet 5 new models bringing back the muscle car. Trade in the V8 for small engines with big power. More -
Don't expect a new global treaty, but the decisions may still change our lives. More -
We check in with nine recent grads about their job searches. More
