Gold Investors Celebrating New Year & Aiming Higher (NG, EGO, AEM, GLD)

Comex gold futures edged higher amid a weaker dollar and low trading volumes Friday. The yellow metal was firmly above the $1,400 mark on the last trading day of 2010 and looks likely to lock in a 29% gain on the year, the largest in three years. The most actively traded contract, for February delivery, was recently up 0.6%, or $8.60, at $1,414.50 per troy ounce on the Comex division of the New York Mercantile Exchange. The thinly traded January delivery contract was up 0.06%, or $8, at $1,413.60 per troy ounce. Low trading volumes on the final market day of the year added some support to gold. The gold market has been increasingly quiet in the week between Christmas and the New Year as many traders take an extended winter vacation. A weaker dollar boost gold prices Friday, as dollar denominated gold appears cheaper to buyers using foreign currencies when the dollar eases. The Euro was recently at $1.3366, up from $1.3295 late Thursday. “Today's dollar drop has got gold supported,” said Frank Lesh, Broker and Futures Analyst of FuturePath Trading. Currency concerns have been a major factor funneling investment funds towards the yellow metal throughout 2010. Sovereign debt worries in Europe and large stimulus spending in the U.S. resulted in a particularly volatile year for both the Euro and the Dollar, and left investors seeking a safe harbor in gold, which is often seen as an alternative currency and inflation hedge. Gold, considered a hedge against inflation, has also benefited from global inflation concerns. Chinese investors ramped up their gold purchases throughout 2010 amid escalating inflation rates, even as the government implemented a number of tightening measures. Meanwhile, a $600 billion fiscal stimulus in the U.S. saw many investors purchase gold to guard against long-term inflation. “It seems as if all the drivers for gold are still there and we can certainly look forward to more currency volatility, more political instability, and more fiscal irresponsibility,” said Lesh. NG, EGO, AEM, GLD