Gold Rally: Gold Closes At Seven-Week High Of $842.70

Friday, December 28, 2007 2:37:41 PM - Gold finished at its highest level in seven weeks on Friday in U.S. trading. Bullion for February delivery closed at $842.70, up $10.90 for the day. Bullion finished up for the fifth straight session and ended the week up $27.30 from last Friday's close.

The precious metal's hedge value was boosted by further weakness for the U.S. dollar. The greenback extended its 2 1/2 week low against the euro, continuing a downward move that began Tuesday evening. The buck also fell to a 10-day low against the British pound and a six-week low against the Canadian dollar.

Gold continued its rally on Thursday and added $2.30 on the session. Trading took place following the assassination of Pakistan Prime Minister Benazir Bhutto in a suicide attack, which led many traders to flee to gold as a hedge against uncertainty. The metal climbed $13.00 an ounce in Wednesday's session and has moved above a recent trading range. Bullion had been generally range-bound for most of December before the recent advance.

On the economic front, a report released by the Department of Commerce on Friday showed that new home sales fell 9.0 percent to an annual rate of 647,000 units in November from a revised October rate of 711,000 units. Economists had expected sales to fall to a 715,000 unit rate compared to the 728,000 unit rate originally reported for the previous month.

Friday morning, the National Association of Purchasing Management - Chicago released its report, which showed that the Chicago purchasing managers index rose to 56.6 in December from 52.9 in November, with a reading above 50 indicating growth in the sector. Economists had expected the index to edge down to about 52.0.

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