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 US Fed 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 per cent 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 golds biggest loss since 1981,while the current price is 37 per cent 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 dont expect prices to decline as much as this year. From mid year onwards,depending on economic data,there could be some recovery, said a Hong Kong-based precious metals trader.
This year,a combination of a recovering global economy,rallying stock markets and stubborn low inflation in the US have erased golds appeal as a safe-haven and as a hedge against rising prices.
Gold is going to struggle again next year unless the stock markets see a correction, said another trader.
Futures inch up as Re weakens
mumbai: Gold futures rose slightly on Thursday as the rupee depreciated against the dollar. The most-active gold for February delivery was up 0.27 per cent at Rs 28,529 per 10 gram at 3:57 pm on the MCX.
Silver for March delivery was up 0.37 per cent at 44,150 rupees per kg.
Dip buying and choppiness in the US dollar has lent some support to gold price, Kotak Commodity Services analysts wrote in a note.
International gold was nearly flat. The partially convertible rupee,which plays a key role in determining the landed cost of the dollar-quoted yellow metal,fell tracking losses in other Asian currencies.
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. reuters