October 25, 2010

Metals Get a New Shine After Lackluster G-20 Summit

Gold, silver and other prices rise, along with associated metals funds, thanks to weakness in the U.S. dollar

Gold prices rose 1% and silver 2% on Monday, after experiencing their first decline in about three months last week. These increases, as well as a new high for palladium, came after the U.S. dollar fell due to a lack of consensus over monetary and currency policy at the recent G20 meeting.

As spot gold hit $1,336.42 an ounce mid-day, December gold futures climbed $11.40 to $1,336.50, Reuters reported on Monday.

Saturday’s G20 meeting left the global economy with the status quo in currency markets, thus failing to stop sales of the U.S. dollar on expectations the Fed should unleash a second round of quantitative easing at its November 2-3 meeting, analysts say.

Metals experts at HSBC said Monday they expect gold prices to hit $1,400 an ounce if Federal Reserve policy includes the purchase of up to $2 trillion of bonds. A smaller purchase, of say $50 billion, could move the dollar higher and gold lower, though, they warned.

Continued uncertainty over the global economic recovery and inflation worries have pushed more investors to buy gold, which is up about 22% year to date, and other precious metals.

Fund Performance

SPDR Gold Shares (GLD) moved up 1% to about $131 on Monday, still off of its October 14 high of nearly $135. And the iShares Silver Trust (SLV) ticked up 1.25% to about $23.

The ProShares Ultra Silver (ACQ) rose 3.16% to $96.80, while the ProShares Ultra Gold (UGL) gained 1.77% and traded near $63.65.

The ETFS Physical Palladium Shares ETF (PALL) increased 3.5% to $60.83, near its all-time high of $61.08. And the ETFS Physical Precious Metals Basket ETF (GLTR) gained roughly 1.40% to trade near $76.70. 

Popular mutual funds, like the USAA Precious Metals and Minerals (USAGX) is trading near $42, after hitting $45 in mid-October. And US Global Investors Gold and Precious Metals Fund (USERX) was priced at $18.50 on Monday, near its two-year high of $19.89.   

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