Gold's 10 percent gain in 2011 extends run to 11th year

NEW YORK Fri Dec 30, 2011 3:13pm EST

Gold and silver bars are pictured at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna August 26, 2011. REUTERS/Lisi Niesner

Gold and silver bars are pictured at the Austrian Gold and Silver Separating Plant 'Oegussa' in Vienna August 26, 2011.

Credit: Reuters/Lisi Niesner

NEW YORK (Reuters) - Gold rose 1 percent on Friday, rebounding from losses earlier this week that sent the market briefly into bear territory, and the metal sealed its 11th consecutive year of gains.

Bullion posted a gain of 10 percent for 2011, its smallest annual rise in three years. It remains down 18 percent from a record $1,920.30 set in September, and finished the fourth quarter with its first quarterly loss in more than three years.

Analysts said a rebound rally is possible in the near term but gold is far from retesting all-time highs.

"Gold's technical set-up since late yesterday could be the start of a bullish reversal and a short-term bottom," said Michael Matousek, senior trader at U.S. Global Investors Inc (GROW.O), which has $2.5 billion in assets.

Spot gold rose 1.2 percent to $1,564.69 by 2:26 p.m. EST (1926 GMT), but it has limped into the end of the year with a 10 percent drop in December.

Gold fell heavily in December, as hedge funds scrambled for cash to meet client redemptions and European banks trimmed their gold holdings to raise capital.

U.S. February gold futures contract settled up $25.90 at $1,566.80, snapping six straight sessions of losses.

The metal enters the new year on an uncertain footing and appears to have lost its safe-haven status.

"We think gold could struggle into the first part of 2012 and potentially drop into the $1,300 to $1,450 region," said Mark Arbeter, chief technical strategist of S&P Capital IQ.

"...considering that gold remains in a decade-long bull market, in our view, we think a major bottom could be seen in the weeks ahead," Arbeter said.

Gold was one of the top-performing assets in 2011, giving investors a return of 10 percent, but it underformed U.S. 10-year Treasuries, which returned about 17 percent and Brent crude oil, which gained around 14 percent.

DEATH CROSS LOOMS

Despite Friday's rally, technical factors suggest gold's momentum has turned bearish.

Bullion's 20-day moving average (DMA) dipped below its 200 DMA on Thursday, in what technical analysts termed a "death cross," as short-term momentum has turned more negative than long-term momentum and could show that the current downtrend is pervasive.

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Death cross graphic: r.reuters.com/fax75s

Consolidation phase: r.reuters.com/cev75s

2011 assets performance: r.reuters.com/xut75s

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"When you start seeing a lot more bearish technical events occurring, more and more shorter-term traders are inclined to selling their positions," said Adam Sarhan, chief executive of Sarhan Capital.

In recent months, gold has often shed its traditional safe-haven status as investors liquidated positions to free up cash as the euro zone debt crisis caused money markets to seize up.

"We need to see real money from the money managers coming back to this market. They have been absent throughout December," Saxo Bank senior manager Ole Hansen said.

Managed money's bullish futures position was at its lowest since early 2009, CFTC data showed, a sign that investors were bailing out of the market.

Silver rose 0.4 percent to $27.85, down 9.5 percent in 2011 for its first loss in 3 years. Platinum was up 1.6 percent at $1,391.24 and palladium jumped 2.8 percent at $647.50.

2:26 PM EST LAST/ NET PCT LOW HIGH CURRENT

SETTLE CHNG CHNG VOL

US Gold FEB 1566.80 25.90 1.7 1546.20 1582.80 85,237

US Silver MAR 27.915 0.600 2.2 27.260 28.460 21,520

US Plat JAN 1399.70 36.30 2.7 1372.40 1398.70 703

US Pall MAR 656.15 32.40 5.2 624.65 659.10 2,397

Gold 1564.69 19.29 1.2 1545.88 1580.76

Silver 27.850 0.120 0.4 27.340 28.460

Platinum 1391.24 21.50 1.6 1372.00 1403.75

Palladium 647.50 17.56 2.8 628.19 655.25

TOTAL MARKET VOLUME 30-D ATM VOLATILITY

CURRENT 30D AVG 250D AVG CURRENT CHG

US Gold 93,874 166,085 194,354 24.18 -0.84

US Silver 22,314 48,101 78,154 40.53 -1.60

US Platinum 5,819 10,027 7,923 31 -3.00

US Palladium 2,409 4,979 4,686

(Additional reporting by Susan Thomas in London and Rujun Shen in Singapore; Editing by David Gregorio)

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Comments (4)
Duffminster wrote:
What the publication misses here is that while the US stock market is barely at break even, gold is well above where it started 2011, once again being the only true safe haven and the safest form of risk aversion.

Yet, the mainstream talks about gold as if it had some kind of blow of top. It never did. Gold is steady and only the central banks and their minions in the TBTF zombie banks they keep afloat by lending ever more money to them don’t want you to think gold is a viable alternative to their debt infested currencies and like every act of dying empire and the acts of cruel souls seeking to hold to a system debt slavery and increasingly intrusive government under the guise of a never ending war on “terror” they seek to dissuade “We the People” from believing in honest money and in true competition and true capitalism and instead subcribe to their corporate welfare system for the rich and by the rich.

Gold and silver are honest money and have through the ages been the bi-metal standard for money.

Gold has formidable support at $1550, $1525 and especially at $1500. In my opinion, entering at these levels ensures another profitable year in gold as the balance sheets of the central banks increase towards infinity and solvency of much of the global sovereign debt is increasingly questionable at best.

I like what the famed Elliot Wave theorist has to say on the subject of the dollar and I’d add the euro to it easily as well:…

“…Let’s attempt to define what gives the dollar objective value. As we will see in the next section, the dollar is “backed” primarily by government bonds, which are promises to pay dollars. So today, the dollar is a promise backed by a promise to pay an identical promise. What is the nature of each promise? If the Treasury will not give you anything tangible for your dollar, then the dollar is a promise to pay nothing. The Treasury should have no trouble keeping this promise….”

Dec 30, 2011 12:36am EST  --  Report as abuse
shane2 wrote:
The reasons gold has gone up every year for the last 11, and been the best performing asset over that time frame, have not now suddenly gone away, but only increased & intensified.

Most pundits who poo-poo gold today have done so, and been dead wrong, for the last decade. Why anyone would think they are suddenly any smarter today to tell anyone what gold will do tomorrow is beyond me.

Dec 30, 2011 6:38pm EST  --  Report as abuse
daedilus wrote:
Thus sayeth the banker prognosticators:

After 20,000 years as the worlds premier value holding, and most universal currency, gold is now unsafe and undesirable…

Everybody got that?

Good… Now go buy gold, while it’s low!

Buying opportunity, while nearly defunct banks shed their holdings trying to raise poo-poo capitol to save their hides. Nothing more.

Dec 31, 2011 9:26am EST  --  Report as abuse
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