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Gold Prices Rise on Bargain Hunting

Tickers in this article: ABX AUY GLD IAU NEM NG

NEW YORK ( TheStreet) -- Gold prices were gaining on Friday as bargain hunters emerged after two massive selloffs in the past three days for the yellow metal. Gold dropped 1.3% on Thursday .

Gold for February delivery settled up $14.20 to $1,660.10 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,660.40 and as low as $1,636.30 an ounce, while the spot price was increasing $8.60, according to Kitco's gold index.

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Gold plunged Thursday on better-than-expected third-quarter gross domestic product as the report signaled a trend toward improving economic conditions. The yellow metal also plummeted Tuesday after the White House rejected House Speaker John Boehner's "Plan B" tax proposal.

"To us there was really no reason for the selloff ; there's no piece of data, and physical demand continues to be reasonable, central banks continue to buy gold," said Oliver Pursche, co-portfolio manager at GMG Defensive Beta Fund. "So to us it was kind of perplexing and just one of those dislodged price moves in the market that occur from time to time."

Boehner's proposal failed Thursday night before it reached the House floor as Boehner couldn't rally enough Republican support. Immediately after the announcement, futures markets dropped, but gold began a slight tick higher.

The House GOP failure could suggest greater difficulties among legislators to reach a deal.

Failure to reach a so-called fiscal cliff agreement could be negative for gold prices as a full expiration of tax relief measures and implementation of massive spending cuts could thrust the U.S. economy into a recession, which would be negative for gold.

Silver prices for March delivery ticked up 53 cents to $30.20 an ounce, while the U.S. dollar index was jumping 0.40% to $79.57.

Boehner reemerged Friday morning to punt responsibility back to Senate Democrats and President Obama. It was a political move to avert attention of the House speaker's inability to gather consent among his own party.

Shortly afterward, Senate Majority Leader Harry Reid spoke on the Senate floor and scolded Boehner for having "wasted a week on this futile political stunt."

Activity remained relatively quiet in the eurozone, while China and Japan had no economic reports scheduled for Friday.

Activity could be light in gold trades next week as many investors take a break for the holiday week and others square away their books for the end of the month, quarter and fiscal year.

As a final note, House Majority Leader Eric Cantor said the House would reconvene sometime after Christmas. This means Congress may attempt to reach a fiscal cliff deal sometime before Jan. 1, but it's unclear what, if any, negotiations will accomplish.

Gold mining stocks were mostly higher on Friday. Shares of NovaGold Resources (NG) were rising 2.3%, and shares of Yamana Gold (AUY) were climbing 2.1%

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