1st LD Writethru: Gold up on weak U.S. data

Gold futures on the COMEX division of the New York Mercantile Exchange rose Friday as the U.S. Employment Cost Index report was much worse than expected.

The most active gold contract for December delivery rose 6.4 U. S. dollars, or 0.59 percent, to settle at 1,095.10 dollars per ounce.

A report released by the U.S. Department of Labor showed the Employment Cost Index rising 0.2 percent, which analysts say is the smallest increase in 33 years. This was much worse than expected, and gave support to the precious metal.

Analysts believe that the exceptionally poor report may push back expectations for the U.S. central bank's interest rate increase. A rise in the Fed's interest rate drives investors away from gold and towards assets with a return, as the precious metal bears no interest. There has not been an increase in the Fed's interest rate since June 2006, before the beginning of the American financial crisis.

The U.S. Dollar Index fell by 0.27 percent to 97.22 as of 1915 GMT, giving support to gold. The index is a measure of the dollar against a basket of major currencies. Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.

Silver for September delivery rose 4.9 cents, or 0.33 percent, to close at 14.765 dollars per ounce. Platinum for October delivery fell 5 dollars, or 0.49 percent, to close at 985 dollars per ounce. Endite