Gold steady; set for biggest annual loss in three decades

Gold was little changed on Thursday in thin year-end trade, but looked set to post its biggest annual loss in more than three decades as rallying equities and optimism about a global economic recovery dented its safe-haven appeal.

Worries this year that the U.S. Federal Reserve will begin unwinding its stimulus and then the recent decision to do so has also hurt bullion that is seen as a hedge against inflation.

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.

Spot gold was flat at $1,204.49 an ounce by 0349 GMT. The decline this year is set to be gold's biggest loss since 1981, while the current price is 37 percent below an all-time high of $1,920.30 hit in 2011.

Analysts and traders expect prices to drop further next year, but not to the same extent.

"Early next year we could test the $1,000 level but I don't expect prices to decline as much as this year. From midyear onwards, depending on economic data, there could be some recovery," said one Hong Kong-based precious metals trader.

This year, a combination of a recovering global economy, rallying stock markets and stubborn low inflation in the United States have erased gold's appeal as a safe-haven and as a hedge against rising prices.

U.S. stocks are on track to become the top investment in 2013, with the S&P 500 index on course to mark its best year since 1997. Japanese stocks are a close second.

"Gold is going to struggle again next year unless the stock markets see a correction," said another trader.

Several brokerages such as Goldman Sachs, BNP Paribas and Societe General expect gold prices to drop below $1,050 in 2014.

"I doubt we'll see prices going below $1,000 as miners would start shutting mines then and supply issues would boost prices again," said the second trader.

Physical demand, which had climbed to peak levels earlier this year as gold prices fell sharply, has now cooled - lessening its support for prices.

Silver is down 36 percent for the year, its worst annual performance since at least 1982.

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Source: Reuters

Gold futures ease on stronger rupee

Gold futures in India edged down on Monday on a stronger rupee, though premiums stayed on the higher side due to lack of supplies.

* At 2:53 p.m., the most-active gold contract for February delivery was 0.27 percent lower at 28,477 rupees per 10 gram on the Multi Commodity Exchange.

* Silver for March delivery was down 0.07 percent at 43,975 rupees per kg.

* The rupee, which strengthened on Monday, plays an important role in determining the landed cost of the dollar-quoted yellow metal.

* Premiums stayed steady at $140 an ounce on London prices.

* "There has been no pick-up in demand, they (suppliers) have ample gold for exports, but nothing is available for domestic," said Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation.

* Indian gold imports may fall 70 percent in the final quarter of 2013 from 255 tonnes in the year-ago period and are expected to be half the usual levels at 500-550 tonnes next year if new import rules are maintained, a top trade body official said.

* To curb a rising trade gap, the Indian government slapped a record import duty of 10 percent, and tied imports for domestic consumption with exports.

* India will keep a tight leash on gold imports despite a recent improvement in its trade deficit and lobbying by a bullion industry struggling with high premiums and a supply crunch.

Source: Reuters

Gold treads water; taper worries remain

Gold held steady on Monday after its biggest weekly loss in a month, but the metal was still at the risk of falling back below $1,200 an ounce as investors fretted over the impact of U.S. stimulus tapering.

Prices were supported in thin Asian trading as holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 5.40 tonnes to 814.12 tonnes on Friday - the first inflow since November 5.

"There seem to be subtle shifts in sentiments for more bullishness after $1,200 was broken," said Joyce Liu, an investment analyst at Phillip Futures Pte Ltd.

"However, the upside is limited due to the year-end holiday season and with prices now treading close to $1,200, a break below that level may shift market sentiment back to bearishness."

Spot gold edged up 0.02 percent to $1,202.90 an ounce by 0744 GMT. It rose 1 percent on Friday on short covering after losing 4 percent in the previous three sessions.

Gold fell 3 percent last week after the Fed said the U.S. economy was strong enough to scale back its massive bond-buying stimulus, winding down an era of easy money that saw gold rally to an all-time high of $1,920.30 an ounce in 2011.

The metal has fallen nearly 30 percent this year on fears that a scale back of stimulus would hurt its inflation-hedge appeal.

The decline this year is gold's biggest fall in 32 years.

Physical demand picked up in Asia as prices fell towards $1,200 last week but not to the same level seen during earlier price drops this year.

Volumes traded on the Shanghai Gold Exchange on Monday for the 99.99 percent purity gold contract were 14.83 tonnes, lower than Thursday's two-month peak.

Premiums edged up $2 to $18 an ounce from Friday.

Source: Reuters