Thursday, 2 January 2014 00:00
Reuters: Gold fell to a six-month low in thin year-end trade on Tuesday, notching up its biggest annual decline in 32 years as prospects for global economic recovery prompted investors to switch to riskier assets.
After a 12-year bull run, gold has shed 28% in 2013, with the U.S. Federal Reserve’s plan to step away from ultra-loose monetary policy undermining the investor rationale for holding bullion.
Years of accommodative monetary policies had propelled the price of gold to all-time highs of $1,920.30 an ounce in September 2011, as low interest rates encouraged investors to put money into non-interest-bearing assets.
In choppy trade on Tuesday, spot gold fell 1% to its lowest since June 28 at $1,184.50 an ounce, before recovering its lost ground. Prices were up 0.38% at $1,201.13 per ounce at 2:29 p.m. EDT (1929 GMT).
U.S. gold futures for February delivery settled at $1,202.3, down $1.5 an ounce, having earlier fallen to a low of $1,181.40. That was down 28% from the end of last year.
Bullion was the third-largest loser for the year on the 19-commodity Thomson Reuters/Core Commodity CRB index, after corn and silver.
“For the first three months of the year at least we are quite pessimistic on gold and a break below $1,180 could trigger further declines to the $1,000 mark,” T-Commodity partner Ganclaudio Torlizzi said.
“Moreover, the dollar should strengthen towards the euro in January, as the economy improves, and that’s another bearish element for gold,” he added. “For the time being, investors will continue to put their money into equities.”