US MIDDAY: gold eases

Gold eased on Thursday but prices are still on track to post their biggest yearly rise in three years for a record 10th consecutive annual gain on uncertainty about economic recovery and currencies. Silver and palladium, easily the top performing commodities of the year, also hit multi-year highs on bullish demand expectations for next year.
"The economy is still on life support, and it's only moving forward based on the stimulus and Fed's action. In absence of those, we would still be down on recession," said Frank McGhee, head precious metals trader of Integrated Brokerage Services in Chicago. Spot gold slipped 0.4 percent to $1,404.80 an ounce at 1:52 p.m. EST (1852 GMT). Bullion set a record high of $1,430.95 on Dec. 7.
US gold futures for February delivery settled down $7.60 an ounce at $1,405.90. COMEX gold volume was slightly above 60,000 lots, two-thirds lighter than its average for the past 30 days but in line with lower turnover for most of the commodity complex, preliminary Reuters data showed, as many traders have already closed their books ahead of the new year.
Spot silver eased 0.2 percent to $30.49, having earlier hit a 30-year high at $30.88. The gold/silver ratio, which denotes each metal's relative performance, reached a four-year low. Silver is at its highest since early 1980 and on course for an 83 percent gain this year, its strongest performance in at least 27 years.
Investors have flocked into silver this year as a cheaper safe-haven alternative to gold, which hit a record high of $1,430.95 an ounce in early December. Holdings of silver in the iShares Silver Trust, the world's largest exchange-traded fund backed by physical silver, have risen to 10,903.34 tonnes, from 9,492.97 tonnes at the end of last year, while open interest in US silver futures has risen by 8,801 contracts, or 44.0 million ounces.
Holdings of gold in the SPDR Gold Trust, the world's largest exchange-traded fund backed by physical bullion, have risen 15 percent this year to 1,284.062 tonnes. Palladium was set for a second year of gains, having almost doubled to near $800 an ounce over the course of 2010 and is this year's top performing commodity.
The ratio of platinum to palladium, used to measure how many ounces of palladium is used to buy an ounce of platinum, has fallen to its lowest in about eight years this year, mirroring palladium's outperformance over platinum, which relies heavily on the flagging European car market as a source of industrial demand. Spot palladium eased 0.7 percent to $784.72, while platinum dipped 0.7 percent to $1,747.25.