Gold Extends Gains, Poised to End 2014 Largely Flat

NDTV Profit Desk

31 Dec 2014, 01:28 PM IST

Gold Extends Gains, Poised to End 2014 Largely Flat

Singapore: Gold headed towards $1,200 an ounce on Wednesday, holding onto overnight gains, as worries about Greece's future in the euro zone triggered a sell-off in equities and an increase in safe-haven bids for the metal.

Bullion was on track to end the year largely steady after a turbulent 2013, when prices ended the year nearly a third lower, their first decline in 13 years.

Spot gold was steady at $1,199 an ounce by 0740 GMT. On Tuesday, the metal climbed to $1,209.90, its highest in nearly two weeks, before paring some gains to close up 1.5 per cent.

Chen Min, a precious metals analyst at Jinrui Futures in Shenzhen, said she expected average gold prices next year to be lower at around $1,170 due to a strong recovery in the U.S. economy and expectations of higher US interest rates.

"Prices will be relatively stronger until the middle of the first quarter because of seasonal demand and some safe-haven bids," she said. "But after that, concerns over interest rates and the dollar strength will weigh on prices."

Physical demand for gold was boosted by the holiday season and upcoming Lunar New Year celebrations in China, when gold is bought for good fortune and to be given as gifts, traders said.

Investors remain bearish on gold, but prices have been relatively less volatile in 2014 compared to last year's 28 per cent slide and $500 trading range. For this year, gold has lost 0.3 per cent and traded in a $260 range, although prices fell to a 4-1/2-year low in November.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, however, remain weak. On Tuesday, holdings fell 0.21 per cent to 710.81 tonnes, a six-year low.

Asian markets were ending 2014 on a cautionary note on Wednesday as worries about Greece's future in the euro zone served as an excuse to take profits.

The dollar slipped against a basket of major currencies after a recent rally to a near nine-year peak, though it was set to post its best year since 2005.

Weaker stocks and the dollar help gold, seen as a hedge against riskier assets. A softer greenback also makes gold less-expensive for holders of other currencies.

Silver and platinum were headed for annual declines. With a 13 per cent jump, palladium was the best performer among precious metals this year, as supply concerns from top producer Russia helped the metal head towards a third straight year of gains.