Gold Gains Most in Two Weeks – 12/16/2009

by Bullion Prices Staff on December 16, 2009

Precious metals were driven higher on Wednesday with gold rising the most in two weeks as the U.S. dollar retreated from a two-month high against other world currencies. Gold, silver and platinum registered respective gains of 1.2%, 1.4% and 0.4%. New York precious metal figures follow:

  • Gold for February delivery climbed $13.20 to finish at $1,136.20 an ounce. It ranged from $1,125.00 to $1,140.60.

  • Silver for March delivery rose 23.8 cents to close at $17.693 an ounce. It ranged from $17.350 to $17.795.

  • January platinum gained $5.10 to end at $1,457.60 an ounce. It ranged from $1,441.40 to $1,463.80.

In PM London bullion, the benchmark gold price was fixed earlier in the day to $1,137.50 an ounce, which was an increase of $15.50 from Tuesday. Silver jumped 42 cents to $17.600 an ounce. Platinum was settled at $1,457.00 an ounce, rising $23.00.

Notable bullion quotes follow:

"Under our base-case scenario, we anticipate the peak price could be in the range of $1,250 to $1,300," Morgan Stanley said. "Under our bull-case scenario, which anticipates a later rise in U.S. interest rates and the dollar, this peak range could be as high as $1,325 to $1,350."

"Going into year-end, with relatively thin trading in both the currency and the gold markets… gold is likely to be driven in large by the currency moves," Daniel Major, an analyst at RBS Global Banking & Markets, said on Reuters.

"Gold prices ticked about 1% higher during the overnight hours as the US dollar pulled back ahead of the Fed decision. Yesterday’s surge in the dollar was notable however, and so was the fact that gold fell amid news of an unexpected rise in the PPI," wrote Jon Nadler, senior analyst at Kitco Metals, Inc.

"The pre year-end trade shows all the conflicting signs that can be attributed to the cashing in on profits, window-dressing and/or book-squaring, and some ‘one for the road’ pile-on trades that speculators are noted for, around office eggnog season."

New York crude-oil for January delivery gained $1.97, or 2.8 percent, to $72.66 a barrel. Gold, considered a hedge during times of high inflation and economic uncertainty, tends to follow oil and move opposite to the U.S. dollar. A rising greenback makes dollar-denominated commodities, like bullion, more expensive for holders of other world currencies.

In other economic news, US inflation over the past year returned to positive territory for the first time since February and Americans paid more for energy in November, bringing the cost of living up from the prior month, according to a government report released on Wednesday.

The Consumer Price Index, which measures inflation pressures at the consumer level, rose 0.4 percent in November after a 0.3 percent increase in October, the Labor Department said. Annual US inflation jumped 1.8 percent as compared to the 0.2 percent decline seen in the prior 12 months in October.

In a separate report on Tuesday, the Labor Department said the Producer Price Index (PPI), which measures inflation pressures before they reach the consumer, soared 1.8% in November — the biggest gain in three months. Compared with a year earlier, producer prices moved up 2.4% — their first 12-month increase since November 2008. The annual wholesale inflation rate was 1.9% lower in October.

Finally, the US Mint cut prices on collector coins so they would be better aligned to the cost of gold. Ultra High Relief $20 Double Eagles moved down to $1,489.00, American Buffalo Gold Coins declined to $1,410.00, Uncirculated First Spouse Coins fell to $716.00, and Proof First Spouse Coins were priced at $729.00.

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