Dec. 31 (Bloomberg) -- Gold rose to a record closing price of $1,421.40 an ounce, capping the 10th straight annual gain, on demand for a haven from mounting sovereign debt. Silver posted the biggest yearly advance since 1979. Gold futures rallied 30 percent this year, climbing to an intraday record $1,432.50 an ounce on Dec. 7, amid Europe’s debt woes. The Federal Reserve kept U.S. borrowing costs low and purchased bonds to help revive the economy. In 2010, silver jumped 84 percent, the second-biggest gain among 19 raw materials in the Thomson Reuters/Jefferies CRB Index. “Gold has done so well this year because government activity indicates record deficits, low interest rates and an obvious lack of fiscal discipline,” said Tom Winmill, who manages the Midas Fund in New York. “The U.S. monetary policy will lead to a devaluation in the dollar, and all eyes are focused on the next default in the European community.” On the Comex in New York, gold futures for February delivery closed up $15.50, or 1.1 percent, at the 1:42 p.m. settlement. Gold priced in euros, British pounds and Swiss francs rose to all-time highs this year as the European Union bailed out Greece and Ireland. Holdings in exchange-traded products backed by bullion gained 17 percent, and demand for gold coins surged. “Gold’s rally will continue next year as inflation pressures continue to build and currencies remain weak,” said Li Ning, an analyst at China International Futures (Shanghai) Co. “The global economy is recovering, but we’re not completely out of the woods, and gold’s safe-haven status will increase investment demand.” Silver Rally Silver futures for March delivery rose 42.4 cents, or 1.4 percent, to $30.937 an ounce. Earlier, the price reached $30.975, extending a rally to the highest since March 1980. Only cotton posted a bigger annual increase among components in the CRB. The gauge, reflecting prices of energy, metals and crops, has topped gains in stocks, bonds and the dollar. “Commodities will do well along with other risk-asset classes,” said Aaron Gurwitz, the chief investment officer at Barclays Wealth in New York, which manages about $250 billion. “The fastest-growing economies are very commodity-intensive. Commodities will be under upward price pressure. We like stuff that is used to make things or feed people, like copper, oil and soybeans.” Silver futures reached a record $50.35 in 1980, a year after the Hunt brothers tried to corner the market. Palladium futures for March delivery rose $17.10, or 2.2 percent, to $803.30 an ounce on the New York Mercantile Exchange. Earlier, the price reached $804.90, the highest since March 2001. The metal soared 96 percent this year after more than doubling in 2009. The commodity isn’t a CRB component. Platinum futures for April delivery rose $28.90, or 1.7 percent, to $1,778.20 an ounce. The metal gained 21 percent this year. --With assistance from Sungwoo Park in Seoul, Glenys Sim in Singapore and Nicholas Larkin in London. Editors: Patrick McKiernan, Millie Munshi To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net. To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net

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