Biggest Annual Loss for Gold in Three Decades

Biggest Annual Loss for Gold in Three Decades

Gold experienced a six-month low on Dec 31st, heading towards its largest annual decline in the last 32 years. Investors were prompted by the prospects for global economic recovery to switch to riskier assets as a result.

Gold lost around 28 percent in 2013, after a 12 year bull run. This is a result of the decision of the U.S. Federal Reserve’s to step aside from lenient monetary policy. Propelled by years of accommodative monetary policies, the gold prices climbed its highest to $1920.30 per ounce in September 2011, as investors were encouraged to put money into non-interest bearing assets encouraged by low interest rates.

In earlier trade, gold fell to its lowest since June 28, by one percent at $1,184.50 an ounce, which was before restoring 1.2 percent at 10.17 EST to $1210.26 an ounce in choppy trade. Having earlier dropped to a low of $1,181.40, U.S. gold futures to February delivery increased 0.5 percent to $1,208.80 per ounce.

T-Commodity partner Ganclaudio Torlizzi expressed that they are quite pessimistic about gold for the first three months of the year and further decline to the $1000 mark can be triggered if a break below $1,180 takes place. He added that another bearish element for gold would be to see the dollar strengthening towards the euro in January as the economy picks up. At this point, equities are expected to gain most of the investors’ money.

Since 2009, the first annual rise was seen of the benchmark bond yields and world stocks were close to six-year peaks in the end of 2013. A pick up in global growth was celebrated by investors and there were expectations of more to come in the future.

A rather modest end to 2013 was seen by the dollar as against the other main currencies. Standard Bank analyst Walter de Wet stated that equities and money market funds will be more attractive as soon as short-term interest rates begin rising then one can’t afford to invest in something that doesn’t pay returns like gold.

Fund Liquidation

It seems that investors had lost faith in bullion as a circumvent against inflation proven by a fall in exchange-traded fund holdings. SPDR Gold Trust, which is the world’s biggest gold-backed exchange traded fund, dropped 0.37 percent to 798.22 tons, their lowest since January 2009.

Premiums for gold bars remain stagnant at $1.50 per ounce. In Hong Kong however, offers varied between $1.50 and $2.00.

The price of silver per ounce grew from 0.4 percent to $19.66. Silver has recorded the worst annual performance since 1982, it is low by 37 percent. The worst performing metal in 2013 is silver.

A 0.7 percent rise was recorded for platinum at $1,365.24 per ounce, it also recorded a 12 percent annual loss. High performing palladium rose by 0.4 percent to $709.00 and should end the year by a rise of at least 1 percent.

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