Gold Futures Mark 23% Rise for 2002 in Precious Metals - Interesting News

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Gold Futures Mark 23% Rise for 2002

Indexes up 40%; investment risks spell reward for gold
Dec. 31, 2002
By Myra P. Saefong, CBS.MarketWatch.com

NEW YORK (CBS.MW) -- Gold futures ended the year with a bang Tuesday, adding more than $4 to log gains of 23 percent for 2002 and fueling a more than 40 percent rise in major metals mining indexes.

On the New York Mercantile Exchange Tuesday, gold for February delivery closed at $348.20 an ounce, up $4.10. Metals trading on Nymex closed at 12:10 p.m. Eastern standard time in anticipation of the New Year's holiday Wednesday.

The February contract closed the year 2001 at $282.50 an ounce, and prices ended what's been a memorable 2002 above the $348 mark.

On average, gold closes the year with a price near $310.70 an ounce, according to UBS Warburg analyst Andy Maag -- that's almost $40 higher than the average seen over all of 2001.

And 2002 saw prices reach fresh 5 1/2-year highs at $351.50 for futures prices and $355 for spot gold, levels achieved within the last month of the year.

U.S. tensions with Iraq and North Korea over weapons of mass destruction will likely continue to influence the price of gold in at least the early part of the coming year.

"We believe the weight of the risks favor upside over the next three to six months," John Hill, an analyst at Salomon Smith Barney told clients Tuesday. He characterized the investment climate as "geopolitical catalysts on a gold-friendly backdrop."

Metals indexes ends year higher

Meanwhile, metals mining indexes closed little changed after an earlier attempt to recover the 2 percent fall suffered in Monday's action.

The Philadelphia Gold & Silver Index closed at 76.75, down 0.1 percent. It ended the year 2001 at just 54.43 so it's up 41 percent in one year.

The CBOE Gold Index tacked on 0.2 percent to 63.21. The index is up 51 percent from the 41.98 level it closed at on Dec. 31, 2001.

And the Amex Gold Bugs Index rose 0.3 percent to 145.12. In the past year, it's more than doubled from the Dec. 31, 2001 close of 65.02.

Among index components, shares of Agnico-Eagle Mines tacked on 19 cents to close at $14.81, Goldcorp closed up 12 cents at $12.72 and Placer Dome rose 23 cents to $11.50.

On the downside, Gold Fields Ltd. fell by 4 cents to $13.96, Anglogold declined 58 cents to close at $34.26 and Newmont Mining shed 21 cents to $29.03. Harmony Gold Mining also closed down 10 cents at $16.81 and Ashanti Goldfields, fell 20 cents to $5.85.

Stillwater Mining, a major platinum and palladium producer, closed at $5.35, up 2 cents.

Dollar strength

The dollar, whose value is vital for traders who must swap out of their local currencies to buy the dollar-denominated precious metal, strengthened against most foreign currencies Tuesday following weakness on Monday.

For the year, however, the euro is up 18 percent at $1.0494 from 88.9 cents compared to the dollar, and the dollar is down 10 percent to 118.75 from 131.6 yen.

The weakness of the dollar against foreign currencies this year made gold less expensive to overseas traders, lifting purchases of the yellow metal.

On the stock market, the Dow Jones Industrial Average and the Nasdaq Composite closed mixed.

Silver follows gold

In other Nymex metals action, the March contract for silver closed at $4.812 an ounce, up 13.9 cents. The contract is up 5 percent from the $4.592 close it saw it a year ago.

But UBS Warburg's Maag recommends caution for silver trading. If investors take profits on gold, "silver would then come off rather quickly," he said.

Platinum and palladium ended mixed after gaining over the past two previous sessions.

March palladium closed at $238 an ounce, down $1, while April platinum rose $2.90 to $594.40 an ounce.

March copper closed at 70.25 cents a pound, down 0.15 cent. January copper eased back by 0.6 cent to lose at 63.9 cents a pound.

As for supplies, Nymex gold inventories were at 2.04 million troy ounces late Monday, unchanged from the previous session. Silver inventories were essentially unchanged at 107.4 million troy ounces, while copper stocks rose 1,000 short tons to 399,345 short tons.

Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.

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