Gold Drops Modestly, Ends Month Notably Higher

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Gold prices finished lower on Friday as traders turned futures into cash to compensate for stock market losses. A rebound for the U.S. dollar lowered the metal's hedge value.

December gold closed at $1,040.40, down $6.70 on the session. Prices hit as low as $1,035.40 earlier in the day.

The metal fell more than $15 on the week, but still finished October up nearly 4%. Earlier in the month, gold hit an unadjusted for inflation record $1,072 per ounce.

The dollar rebounded versus the euro and recovered most of yesterday's losses. The buck also moved mildly higher versus the pound.

In economic news, a Commerce Department report showed that personal spending fell by 0.5 percent in September following an upwardly revised 1.4 percent increase in August. The moderate pullback in personal spending came in line with the expectations of economists.

A separate Commerce Department report said personal income decreased by less than 0.1 percent in September after edging up by a revised 0.1 percent in the previous month. Economists had expected income to be unchanged.

A Institute for Supply Management - Chicago report showed that the index of activity in the manufacturing sector rose to 54.2 in October from 46.1 in September, with a reading above 50 indicating growth in the sector. Economists had been expecting the index to increase to a reading of 49.0.

The Reuters and the University of Michigan report showed that the consumer sentiment index was revised up to 70.6 from the preliminary October reading of 69.4, although it remained below 73.5 in September. Economists had been expecting the index to be revised up to a reading of 70.0.

On Monday, ISM manufacturing data is due at 10 a.m. ET. A reading of 53.0 is expected for October, compared to a 52.6 for September.

Construction spending data is also coming at 10 a.m. ET. September spending is expected to come in down 0.4%, compared to a rise of 0.8% in August.

At the same time, pending home sales data is also on the calendar. A rise of 1% is expected for September, compared to a decline of 0.8% in August.

(Market News Provided by RTTNews)