LONDON: Gold edged up yesterday, supported by some physical buying, but remained on track for its biggest annual loss in three decades as rallies in equities and prospects of global economic recovery dented its appeal.
Expectations that the US economy can stand on its own as monetary stimulus is withdrawn were buoyed by data on Thursday showing a decrease in weekly jobless claims, which propelled stock markets higher.
Germany’s benchmark index DAX touched a record high, while US Treasury yields hit their highest since July 2011 above 3 percent.
Gold rose 0.3 percent to $1,214.40 by 1509 GMT, while US gold futures for February delivery edged up 0.2 percent to $1,214.00 an ounce. “The market is probably going to stay in wide ranges for the next few sessions and there will still be some support from Asian buyers ahead of the Chinese New Year at the end of January,” VTB Capital analyst Andrey Kryuchenkov said.
“But volumes are very thin now and we need to wait for when the Western investors come back (from holidays) to see what they will be doing,” he added. “I think they will liquidate again into this price rebound as there is no fundamental reason to buy the metal.”
Prices should hold between $1,190 and $1,220 an ounce over the next few sessions, with moves likely to be exacerbated by a lack of liquidity during the year-end holiday period, traders at MKS Capital said.
Bullion fell to a six-month low of $1,185.10 last week, after the US Federal Reserve said it would begin tapering its $85bn in monthly bond purchases next month, before recovering slightly.
Gold is headed for a near 30 percent slump in 2013, ending a 12-year rally prompted by rock-bottom interest rates and measures taken by global central banks to prop up the economy, which encouraged investors to put their money in non-interest-bearing assets such as gold.
This year’s decline is set to be gold’s biggest since 1981, while current prices are 37 percent below an all-time high of $1,920.30 hit in 2011.
As a gauge of investor interest, holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.19 percent on Thursday to 804.22 tonnes, the weakest since 2009.
Reuters
