Gold set for biggest annual plunge in 30 yrs

Precious metal falls for first time in 4 sessions, tumbles 28 per cent over 2013.


Gold has broken its positive trend and fallen for the first time in four sessions.

Gold futures for February delivery on Monday fell $US10.20, or 0.8 per cent, to settle at $1,203.80 on the Comex in New York amid quiet Christmas holiday trading.

Trading was 49 per cent below the average for the past 100 days for this time of day, data compiled by Bloomberg showed.

The precious metal is set for its biggest annual loss in three decades, Bloomberg said. It has tumbled 28 per cent this year and is set for the worst annual plunge since 1981.

Some investors lost faith in the metal as a store of value amid a rally in equities and an improving economy, which prompted the Federal Reserve to pare its monthly bond purchases by $US10 billion, to $US85 billion, starting in January.

Many economists expect the Fed will probably reduce its bond purchases in $US10 billion increments over the next seven meetings before ending the program in December 2014, Bloomberg said on Monday.

Holdings in exchange-traded products backed by bullion have dropped 33 per cent this year to the least since 2009, data compiled by Bloomberg show.

"The market is fearing the impact of tapering," Peter Fertig, the owner of Quantitative Commodity Research in Hainburg, Germany, said.

"You have firmer equity markets. There's currently no crisis and nothing that would induce investors to rush into gold."

Silver futures for March delivery on Monday dropped 2.2 per cent, or 43 US cents, to $US19.615 an ounce on the Comex. The metal has lost 35 per cent this year, on course for the biggest annual slump since 1981.

On the New York Mercantile Exchange, palladium futures for March delivery declined 0.2 per cent to $US710.80 an ounce. Platinum futures for April delivery fell 0.8 per cent to $US1,367.20 an ounce.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles