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Gold & Silver Resumed Rally as Dollar Weakened

October 25, 2010 at 20:12 by Vladimir Vyun

Gold gained today as a weaker dollar increased appeal of precious metals as an alternative hedge. The dollar dropped today after the meeting of Group of Twenty failed to provide any cohesive plan to prevent so-called “currency wars” or “competitive devaluation”, fueling speculation that the Federal Reserve would perform quantitative easing. The US currency fell as much as 1 percent versus the basket of major currencies.

Current dollar weakness makes investors to reconsider its role as safe haven, making them look for assets more suitable to this role. Gold is such asset and demand for it should remain steady, even though somewhat subdued because of high prices. Other precious metals also benefited for a weaker dollar.

December futures for gold delivery gained $14.10 (1.1 percent) to $1,339.20 by 11:49 on COMEX. The metal dropped as much as 3.4 percent last week. December futures for silver delivery advanced $0.477 (2.1 percent) to $23.595 per ounce.

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