Gold steadies in thin holiday trade, set for annual loss
Gold steadied on Friday, supported by some physical buying, yet remained on track for its biggest annual loss in three decades as rallies in equities and prospects of global economic recovery dented its appeal.
Expectations that the US economy can stand on its own as monetary stimulus is withdrawn were buoyed by data on Thursday showing a decrease in weekly jobless claims, which propelled stock markets higher.
Germany's benchmark index DAX hit a record high, taking its cue from all-time closing highs on Wall Street and gains in Asia, while US treasuries yields hit their highest since July 2011 above 3 per cent.
"The market is really focusing on this pick-up in economic growth that we continue to see in the United States," Saxo Bank senior manager Ole Hansen said.
"If growth is the key driver as we start the year, that doesn't give much upside potential to gold, which is usually considered a safe haven."
Gold was flat at $1,210.50 by 1243 GMT, while US gold futures for February delivery edged down 0.2 per cent to $1,210.30 an ounce.
Prices should hold in a range between $1,190 and $1,220 an ounce over the next few sessions, with moves likely to be exacerbated by a lack of liquidity during the year-end holiday period, traders at MKS Capital said.
Bullion fell to a six-month low of $1,185.10 last week, after the Fed said it would begin tapering its $85 billion in monthly bond purchases next month, before recovering slightly.
Biggest annual decline in 32 years
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, which encouraged investors to put their money in non-interest-bearing assets such as gold.
This year's decline is set to be gold's biggest since 1981, while current prices are 37 per cent below an all-time high of $1,920.30 hit in 2011.
As a gauge of investor interest, holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.19 per cent to 804.22 tonnes on Thursday from 805.72 tonnes on Tuesday, the weakest since 2009.
Physical buying from Chinese consumers edged up on Friday, but demand from Indonesia and Thailand has eased in recent weeks due to their weak currencies.
Premiums for gold bars inched up to a high of $2 an ounce above spot London prices in Hong Kong, up from $1.50 last week, as dealers awaited the arrival of fresh supply from Europe next month.
Premiums in Singapore, a centre for bullion trading in Southeast Asia, were steady at $1.50 an ounce.
In other precious metals, silver rose 0.4 per cent to $19.80 an ounce, having posted its biggest daily gain for two weeks, up 1.9 per cent, on Thursday. Silver is down 35 per cent this year in its worst annual performance since at least 1982.
Spot platinum was up 0.8 per cent to $1,366.00 an ounce, after rising the most since mid-October in the previous session. Spot palladium rose 1 per cent to $705.00 an ounce.
Copyright @ Thomson Reuters 2013
