* Gold's rally seen extending well into 2011
* Silver is hottest commodity in CRB, rising 83 pct
* 2010 winners and losers: http://link.reuters.com/ret24r
(Updates with late/closing prices, year-on-year percent
gains, U.S. comment. Changes byline, dateline. Rewrites
throughout.)
By Carole Vaporean and Amanda Cooper
NEW YORK/LONDON, Dec 31 (Reuters) - Gold rose to within $10
of a record high on Friday, closing out an unprecedented tenth
annual gain as the combination of a weaker dollar and global
economic uncertainty seemed to pave the way higher next year.
The entire precious metals complex had a stellar run in
2010, led by palladium's 97 percent rise, in a broad
commodities rally that pushed the 19-commodity
Reuters-Jefferies CRB index <.CRB> up 15 percent. []
Spot silver <XAG=>, too, swept higher for an 83 percent
gain on the year, as investors sought the white metal as an
alternative to gold. It was the best-performing assets in the
CRB, hitting a 30-year peak of $30.92 on Friday.
Spot gold <XAU=> moved up to $1,418.85 an ounce by 2:22 EST
(1905 GMT), up 1.06 percent from the previous close at
$1,403.99, and a 29.4 percent advance over 2009. Bullion prices
were on track for their fifth straight month of gains, the
longest stretch of monthly increases since late 2001.
U.S. February gold futures <GCG1> settled 2010 at $1,421.40
an ounce, up $15.50, or 1.1 percent, and marked a 29.7 percent
gain over 2009's settlement when the active gold contract ended
at $1,096.2 on the COMEX division of the NYMEX.
Friday's gains were spurred by the dollar's broad decline
against a basket of currencies <.DXY>, as investors closed
their books on 2010. But the U.S. currency still managed to end
a volatile year a bit firmer. []
"The gold price remains well supported by a weaker dollar
and solid investment demand," said Anne-Laure Tremblay,
precious metals strategist at BNP Paribas.
"We expect the gold price rally to continue into 2011 on
the back of strong fundamentals, including inflationary
pressures (notably in China), ample liquidity and concerns
about the value of the dollar," she added.
Traders and analysts expect gold to break above $1,500 in
2011, particularly if the dollar extends its decline, the U.S.
economy remains unable to generate enough jobs to lower
unemployment and Europe's debt crisis is not diffused.
"As for next year, I'm thinking gold could trade firmly
over the next quarter or two. And then have the potential to
see some weakness in the second half of the year," said Tom
Pawlicki, precious metals analyst at MF Global in Chicago.
He said he thinks gold investors will remain focused on
sovereign debt issues, and Chinese and central bank buying of
gold, along with quantitative easing enhancing gold's luster.
But eventually those issues will get played out, he added
and an increase in the negative real yields that have been
benefited gold in 2010 could work against precious metals plays
in 2011 as economic growth begins to pick up.
"If short-term yields start rising because the economy gets
better or because monetary policy gets normalized that may take
away that negative yield argument for holding gold and add
pressure later in the year," said Pawlicki.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Factbox on the commodities rally in 2010:[]
Commodity performance graphic:
http://link.reuters.com/ret24r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Also tempering some of the enthusiasm, holdings in the SPDR
Gold Trust <GLD>, the world's largest gold-backed
exchange-traded fund, fell to 1,280.722 tonnes by Dec 30, its
lowest since early June. []
Spot palladium <XPD=> surged to a nine-year high at $799.47
an ounce, and platinum, at $1,766.24, was up 20 percent on the
year.
(Additional reporting by Rujun Shen in Singapore; editing by
Keiron Henderson and Sofina Mirza-Reid)
