Photographer: Andrey Rudakov / Bloomberg
Photographer: Andrey Rudakov / Bloomberg
Gold recorded the biggest annual advance in a decade, after a tumultuous year, with gains this month helped by the dollar falling to the lowest since April 2018.
Black gold hit a record high in August, while investors feared that an unprecedented wave of stimulus from central banks and governments would lead to currency devaluation and inflation. Holdings of gold-backed exchange-traded funds reached an all-time high in October.
While prices fell with the launch of vaccines injecting optimism into the financial markets, the dollar’s continued weakness helped support gold later in the year.
Looking ahead, there is little consensus from the biggest names on Wall Street on the direction of gold. Morgan Stanley sees gold and other precious metals under pressure as financial markets normalize and yields on longer-maturity securities rise. Meanwhile, HSBC Holdings Plc sees gold rising further due to continued uncertainty.
Much of the performance of gold in the coming year will depend on whether the eventual return to normality is overcome by ongoing stimulus policies. Led by President Jerome Powell, the US Federal Reserve has signaled that its ultra-easy monetary conditions will last through 2021. Efforts to pass more fiscal stimulus by the Senate have reached another roadblock.
“The main drivers of gold – the weaker US dollar and low real interest rates – are likely to provide support,” even as vaccines are distributed around the world, said Vasu Menon, executive director of investment strategy at Oversea-Chinese Banking Corp , based in Singapore With the Fed down from the longest, “it is too early to throw in the towel on gold,” he said by email.
Gold added 0.2% to close at $ 1,898.36 an ounce on Thursday. This represents an increase of 6.8% for the month and 25% higher for 2020, the biggest advance in the whole year since 2010. The futures for February delivery at Comex rose 0.1%, closing at $ 1,895.10 the ounce. The Bloomberg Dollar Spot Index had a third consecutive quarterly loss.
Spot silver rose 48% this year, while palladium had a fifth consecutive annual gain, with an increase of about 26% in 2020. Platinum rose 11% in the year.
– With the help of Martin Ritchie and Yvonne Yue Li