Photographer: Andrey Rudakov / Bloomberg
Photographer: Andrey Rudakov / Bloomberg
Gold recorded the largest annual advance in a decade after a tumultuous year, with gains this month, helped by the fall of the dollar to the lowest in April 2018.
Bullion hit a record high in August as investors feared an unprecedented surge of stimulus from central banks and governments would lead to currency degradation and inflation. Holdings in exchange traded funds, guaranteed with bullion, reached an all-time high in October.
While prices fell as vaccine launches injected optimism into financial markets, the continuing weakness of the dollar helped sustain gold until the end of the year.
Looking ahead, there is little consensus from the biggest names on Wall Street about the direction of bullion. Morgan Stanley sees gold and other precious metals coming under pressure as financial markets return to normal and longer-term bond yields rise. Meanwhile, HSBC Holdings Plc is seeing gold rise further due to continuing uncertainty.
Much of next year’s gold performance will depend on whether the eventual return to normalcy is outweighed by ongoing stimulus policies. Led by President Jerome Powell, the US Federal Reserve has signaled that its extremely mild monetary conditions will last throughout 2021. Efforts to pass additional fiscal stimulus through the Senate have hit another roadblock.
“The main factors of gold – the weaker US dollar and lower real interest rates – are likely to provide support” even if the vaccines are distributed worldwide, said Vasu Menon, chief investment officer, investment strategy, at Oversea-Chinese Banking Corp With the Fed Fed for longer, “it’s too early to throw in the towel on gold,” he said in an email.
Gold added 0.2% to settle at $ 1,898.36 an ounce on Thursday. It is up 6.8% for the month and 25% higher for 2020, the biggest full-year advance since 2010. Futures for February delivery on Comex rose 0.1% to 1,895 , $ 10 an ounce. The Bloomberg Dollar Spot index had a third consecutive quarterly loss.
Spot silver rose 48% this year, while palladium had its fifth consecutive annual gain, up about 26% in 2020. Platinum rose 11% for that year.
– With the assistance of Martin Ritchie and Yvonne Yue Li