Gold Posts Strong Gains To End Year

Putting off fears that an end of year sell off would depress prices, gold prices increased on New Year’s Eve. Some experts are predicting that gold prices will …

Putting off fears that an end of year sell off would depress prices, gold prices increased on New Year’s Eve. Some experts are predicting that gold prices will continue to rise in 2011, possibly surpassing $1600 per ounce. See the following article from The Street for more on this.

Gold prices posted strong gains on New Year’s Eve, putting an appropriate cap on another year of record returns.

Gold for February delivery added $15.50 to $1,421.40 an ounce at the Comex division of the New York Mercantile Exchange. The gold price settled at its high for the session. Earlier Friday, it traded as low as $1,404.60.

The U.S. dollar index fell 0.59% to $79.02 while the euro was up slightly to $1.3345 vs. the dollar. The spot gold price jumped by $15, according to Kitco’s gold index.

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Extremely light trading volumes on New Year’s Eve had a “vacuum trade” effect, pushing gold prices higher, said Darin Newsom, senior commodities analyst at Telvent DTN in Baltimore.

More fundamentally, however, Friday’s action put to rest the fear from some investors that an end-of-the-year selloff awaited gold and other hot commodities markets. The lessons of 2010’s wild ride in commodities of all kinds were topmost on the minds of many investors and traders Friday. “Commodities are no longer short term investments,” Newsom said, reflecting on those lessons. “The day of the daytrader is gone.”

Looking ahead to next year, many gold bulls are calling for the yellow metal to surpass $1,600 an ounce. Newsom said that midway through January gold prices may begin to test the record highs — $1,432.50 — reached earlier in December. “I think we’ll probably test that high, take out that high, and then we’ll have see what these outside markets will do,” Newsom said, referring to equities, the U.S. dollar and other commodities such as crude oil.

Money could move out of gold into other markets, in other words — or vice versa. Nonetheless, there’s more than enough economic and political uncertainty in the world, Newsom said, that investors will almost certainly continue to burnish gold’s status as the best safe haven available.

Silver prices were gaining about 42 cents to $30.94, while copper added more than 8 cents to $4.45, setting another record high.

The gold exchange-traded fund SPDR Gold Shares(GLD_) was up 1% to $138.48 Friday.

Gold mining stocks, a risky but potentially profitable way to bet on gold, were mostly in the green. Shares of Newmont Mining(NEM_) were rising 0.6% to $61.53 while Freeport McMoRan Copper & Gold(FCX_) was adding 0.9% to $120.06. Among other gold stocks, Yamana Gold(AUY_) was adding 0.9% to $12.80 and Agnico-Eagle Mines(AEM_) was losing 0.3% to $76.75.

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