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(Kitco News) - Metals prices rose Friday after Federal Reserve Chairman Ben Bernanke suggested more quantitative easing might help bring down unemployment, but now the markets look to another central bank, the U.S. monthly jobs report and China’s economic data for direction next week.

Prices were up on the day and the week. The most-active December gold contract on the Comex division of the Nymex settled at $1,687.60 an ounce on Friday, up 0.88% on the week. December silver settled at $31.442 an ounce on Friday, up 2.4% on the week.  On the month, December gold rose 4.5% and silver gained 12.3%.

U.S. and Canadian markets are closed Monday for the Labor Day holiday.

In the Kitco News Gold Survey, out of 33 participants, 24 responded this week. Of those 24 participants, 15 see prices up, while six see prices down, and three are neutral or see prices moving sideways. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

At a Fed symposium in Jackson Hole, Wyo., Bernanke said quantitative easing can do more to help the struggling job market and said he’s open to another round of easing, but did not say when that would occur. Metals prices rallied after the comments.

Market watchers said now with Bernanke’s appearance done, attention will now be on the European Central Bank meeting, the U.S. August nonfarm payrolls report and Chinese economic data.

The ECB meets Thursday to discuss monetary policy and market participants are waiting to see if the bond-buying program announced earlier in August by ECB President Mario Draghi will occur. Andy Busch, global currency and public policy strategist at BMO Capital Markets, said Draghi will either start buying bonds, which will lift markets, or he will wait for an official bailout request, which will cause market prices to fall.

If eurozone gross domestic product data on Thursday shows the economy contracted, that could spur the ECB to act, analysts said.

Friday brings the August nonfarm payrolls report. Bernanke’s Friday comment about the “stagnation of the labor market” makes the jobs report significant. The July data showed 163,000 new jobs were created and market participants will watch to see if that sort of growth is maintained. Analysts surveyed by MarketWatch call for August payrolls to have risen by 120,000 and the unemployment rate to tick down to 8.2%.

“If there is a big miss to the downside, the market will aggressively price in a large QE for the Sept. 13 FOMC (Federal Open Market Committee) meeting.  If the data is better than expected, the market will slowly price out the QE3,” Busch said.

Several Chinese economic data releases are slated for the week, starting Saturday, with NBS Manufacturing PMI. On Sept. 9, inflation data, industrial production, trade balance and retail sales are expected.  Barclays Capital said if the data comes out weaker than expected, especially if inflation is higher than anticipated, it could signal further evidence of slowing economic activity and that would weigh on global growth prospects and risky assets.

Jimmy Tintle, owner, GreenKey Alternative Asset Services, said more than anything else, China is really what market participants should watch.

“Their economy doesn’t look healthy. I can see a slide by them into the end of the year. If China’s economy sinks, that’s bearish gold. I know people are looking for gold to rally into the end of the year and people have gotten long gold and silver, but I don’t see the demand there. If China’s economy weakens, there’s no inflation because people can’t buy anything,” Tintle said.

Barclay’s analysts said outside of the U.S., the global economy is slowing. “The immediate risk, it seems to us, is not that the bottom falls out of the world economy in coming weeks, or that investors suddenly become convinced that it will. The more plausible risk is that, in providing yet another thing for investors to worry about and undermining global recovery as a source of support for market sentiment, the weaker economic outlook may create a more precarious backdrop for the policy event risk that looms large in the months to come,” they said.

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By Debbie Carlson of Kitco News dcarlson@kitco.com

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