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Gold A Shiny Spot in 2011

By:
Barry Norman
Updated: Jan 1, 2011, 00:00 UTC

U.S. economic reports this week have been behind the increased appetite for risky assets as opposed to safe havens like the dollar and Treasuries. The

Gold A Shiny Spot in 2011

U.S. economic reports this week have been behind the increased appetite for risky assets as opposed to safe havens like the dollar and Treasuries. The number of Americans filing for first-time weekly state unemployment benefits fell by 4,000 to 364,000, the lowest level since April 2008, and the Thomson Reuters/University of Michigan’s sentiment index climbed to 69.9 from 64.1 last month.

Besides rising equities, commodities also gained, with crude oil and copper increasing.

The most actively traded gold contract on the Comex edged up 60 cents to $1,611.20, while gold for immediate delivery fell $6.22 to $1,607.81.

Gold inched up 0.2 percent to around $1,609 an ounce.

The precious metal has shed more than $300 since racing to a record above $1,920 in September, an appreciation driven partly on fears that the Federal Reserve’s monetary easing steps would stoke inflation against which it has traditionally been seen as a hedge, but remains up around 13 percent on the year.

People are diversifying away from U.S. dollars and that’s what it comes down to. Despite the fact the U.S. economy is strengthening, there are still expectations in the marketplace that the Fed has showed it’s very keen to print at the best of times, and that’s helping the likes of the euro.

Gold futures recovered a small gain on Friday after a report said U.S. durable-goods orders rose 3.8% in November, more than many economists expected. Personal spending rose 0.1% last month, a little less than forecast. Gold futures for February delivery added 60 cents to $1,611.20 an ounce, and from $1,619.90 an ounce before the data. Analysts also noted that volatility may be higher because of very thin trading volume, potentially exaggerating moves that may otherwise be of minimal significance.

Gold is doing fairly well, investors are not moving so quickly away from gold as the charts would have us believe, and instead as the end of year nears investors are more likely taking their profits as gold hits peaks, as there is little else to show at the end of the year. By selling off, investors can calculate the profit made in gold to offset other losses to help with their yearend figures. Gold has been the only true success story in the markets this year climbing 13%.

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