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Singapore - Gold’s image as a haven asset has taken a battering with the metal heading for its third-straight annual loss amid the sale of gold-backed funds by investors.
Bullion for immediate delivery rose 0.1% to $1 062.33 an ounce at 11:46 in Singapore after declining 0.7% on Wednesday, according to Bloomberg generic pricing. It’s down 10% this year following a 1.4% drop in 2014 and a 28% loss in 2013.
Gold is in the longest slump since 2000 as the dollar surged on the back of monetary policy tightening in the US, joining a collapse in prices of commodities from iron ore to oil. Holdings in gold exchange-traded products have declined 10 times in the last 13 sessions to 1 466.45 metric tonnes, near the lowest in more than six years.
“Gold is suffering from the general exodus out of commodity investments,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said by e-mail. “Being one of the most- traded commodities through ETF’s, the selling pressure from paper investors has been felt particularly hard and gold’s safe- haven status has suffered.”
Gold will face a tough challenge at the start of 2016 and prices may drop toward the $1 000 level before recovering toward $1 200 by the end of the year as the dollar and bond yields retreat, Hansen said.
The first interest rate increase since 2006 took place this month and traders are now looking to the pace at which the Federal Reserve will raise borrowing costs in 2016. While HSBC Holdings predicts just two rate increases, Goldman Sachs Group is among banks that see four. Bullion will drop to $950 by the end of next year, according to Barnabas Gan, an economist at Oversea-Chinese Banking Corporation, who’s the top ranked precious metals forecaster.
Spot silver is also headed for a third year of declines after dropping 11% in 2015. Palladium slumped 31%, the most since 2008, while platinum lost 28%. The two metals, used in catalytic converters that curb car and truck emissions, fell this year partly because of the Volkswagen AG emissions scandal, which hurt prospects for demand.
Bullion for immediate delivery rose 0.1% to $1 062.33 an ounce at 11:46 in Singapore after declining 0.7% on Wednesday, according to Bloomberg generic pricing. It’s down 10% this year following a 1.4% drop in 2014 and a 28% loss in 2013.
Gold is in the longest slump since 2000 as the dollar surged on the back of monetary policy tightening in the US, joining a collapse in prices of commodities from iron ore to oil. Holdings in gold exchange-traded products have declined 10 times in the last 13 sessions to 1 466.45 metric tonnes, near the lowest in more than six years.
“Gold is suffering from the general exodus out of commodity investments,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said by e-mail. “Being one of the most- traded commodities through ETF’s, the selling pressure from paper investors has been felt particularly hard and gold’s safe- haven status has suffered.”
Gold will face a tough challenge at the start of 2016 and prices may drop toward the $1 000 level before recovering toward $1 200 by the end of the year as the dollar and bond yields retreat, Hansen said.
The first interest rate increase since 2006 took place this month and traders are now looking to the pace at which the Federal Reserve will raise borrowing costs in 2016. While HSBC Holdings predicts just two rate increases, Goldman Sachs Group is among banks that see four. Bullion will drop to $950 by the end of next year, according to Barnabas Gan, an economist at Oversea-Chinese Banking Corporation, who’s the top ranked precious metals forecaster.
Spot silver is also headed for a third year of declines after dropping 11% in 2015. Palladium slumped 31%, the most since 2008, while platinum lost 28%. The two metals, used in catalytic converters that curb car and truck emissions, fell this year partly because of the Volkswagen AG emissions scandal, which hurt prospects for demand.
