It does not have a metal core, like the earth.

It does not have a liquid core. The convecting conductive core of the Earth forms what is called a homopolar generator, which forms the Earth's magnetic field. The moon, being solid all through, does not have this. It has a tiny "fossil" magnetic field about a millionth of the Earth's.

The Moon has an external magnetic field of the order of one to a hundred nanotesla—less than one hundredth that of the Earth, which is 30–60 microtesla. Other major differences are that the Moon does not currently have a dipolar magnetic field (as would be generated by a geodynamo in its core), and the magnetizations that are present are almost entirely crustal in origin.[32] One hypothesis holds that the crustal magnetizations were acquired early in lunar history when a geodynamo was still operating. The small size of the lunar core, however, is a potential obstacle to this theory. Alternatively, it is possible that on an airless body such as the Moon, transient magnetic fields could be generated during large impact events. In support of this, it has been noted that the largest crustal magnetizations appear to be located near the antipodes of the giant impact basins. It has been proposed that such a phenomenon could result from the free expansion of an impact generated plasma cloud around the Moon in the presence of an ambient magnetic field.   The external magnetic field of the Moon is very weak in comparison to that of the Earth. Other major differences are that the Moon does not currently have a dipolar magnetic field (as would be generated by a geodynamo in its core) and the varying magnetization that is present is almost entirely crustal in origin. One hypothesis holds that the crustal magnetizations were acquired early in lunar history when a geodynamo was still operating. The small size of the lunar core, however, is a potential obstacle to this theory. Alternatively, it is possible that on an airless body such as the Moon, transient magnetic fields could be generated during large impact events. In support of this, it has been noted that the largest crustal magnetizations appear to be located near the antipodes of the giant impact basins. It has been proposed that such a phenomenon could result from the free expansion of an impact-generated plasma cloud around the Moon in the presence of an ambient magnetic field.[ Roughly once every Lunar orbit, the Moon passes through Earth's magnetotail for approximately 6 days. Interaction with the plasma sheet causes the Moon's surface to become negatively charged. On the Moon's dayside this effect is counteracted to a degree by sunlight: ultraviolet photons knock electrons back off the surface, keeping the build-up of charge at relatively low levels. But on the nightside electrons accumulate and surface voltages can climb to hundreds or thousands of volts. There's growing evidence that fine particles of moondust might actually float, ejected from the lunar surface by electrostatic repulsion. This could create a temporary nighttime "atmosphere" of dust. The moondust atmosphere might also gather itself into a sort of diaphanous wind. Drawn by differences in global charge accumulation, floating dust would naturally fly from the strongly-negative nightside to the weakly-negative dayside. This "dust storm" effect would be strongest at the Moon's terminator. Much of these details are still speculative, but the Lunar Prospector spacecraft detected changes in the lunar nightside voltage during magnetotail crossings, jumping from -200 V to -1000 V. The plasma sheet is a very dynamic structure, in a constant state of motion, so as the Moon orbits through the magnetotail the plasma sheet can sweep across it many times with encounters lasting anywhere from minutes to hours or even days. http://en.wikipedia.org/wiki/Magnetic_field_of_the_Moon FOR IMAGE...http://en.wikipedia.org/wiki/Image:Moon_ER_magnetic_field.jpg

The other answers are all correct, but not phrased in laymen's terms. I will try to put the answer in a simpler form. The Earth's magnetic field is caused by the molten iron core of the Earth which is moving relative to the crust of the earth and the other elements of the core and the semi-molten mantle. All of these parts of the Earth have enough magnetite in them so that as the iron moves relative to the magetite (which acts like a magnet), a current is created, just like in a dynamo. All electric currents are surrounded by a magnetic field. Hence, we have a magnetic field which protects us from many of the hazards of space. The moon is presumed to have no molten inner core. Essentially, we believe it has cooled and solidified. No molten core, no movement, no current, no magnetic field. As the other answers point out, there is a tiny residual field, with numerous different causes, but nothing that compares to that of the Earth, or any other liquid core planet, we would suspect.

what about gravity? gravity is a form of magnetism. the moon has a gravitation pull from the earth. and the sun.

There are magnetic fields on the moon, but the moon as a whole lacks a magnetic field like the earth's. The earth's magnetic field is believed to be generated around the core by dynamo action. However it's generated, the earth's field is a planet-wide phenomenon to which a compass can be applied to find direction. The moon has no molten core. It has "pockets" or "areas" of "local" magnetism based on the distributed material in the crust, and on the small magnetic fields present in the alloys of ferromagnetic material there. Bottom line, you can't get around on the moon using a compass if you don't wanna get lost. - http://wiki.answers.com/Q/Does_the_moon_have_a_magnetic_field