PRECIOUS METALS RECAP 12/30/2011

February Gold closed up 24.1 at 1565. This was 18.8 up from the low and 17.8 off the high.

March Silver finished up 0.6 at 27.915, 0.545 off the high and 0.095 up from the low.

The gold market was able to extend Thursday's late rebound and end up posting sizable gains for the final trading session of 2011. Thin volume led to choppy and volatile price action, but gold as well as other metals markets remained in positive territory into early afternoon. A weak private survey of Chinese manufacturing may have provided the trigger for the rally in metals markets, as it may have provided further evidence for Chinese officials to ease monetary policy during the near future. With no major US data released during the day, gold prices found additional declines in the Dollar and from position-squaring in front of year-end.

The silver market built upon a recovery from Thursday's retest of the mid-September lows, as prices were more than $2.00 above yesterday's weakest levels at today's highs. Carryover support from other metals markets as well as a plunge in the Dollar provided the main source of strength for silver, with the rebound from 13-month lows likely to have encouraged shorts to cover their positions in front of year-end. In addition, projected silver purchases in Asia in front of the Lunar New Year helped to reinforce early gains. Silver sold off towards the low end of the daily range late in the session.