Gold firms near six-month peak; faces first yearly fall in three
Gold traded near a more than six-month peak hit early on Monday but was headed for its first annual decline since 2015, having lost this year to dollar strength due to trade tensions and rising interest rates by the U.S. Federal Reserve.
U.S. gold futures
"We are starting to see signs of crack in the economic future of the global economy. So people are getting very concerned and are starting to put money back into gold," said Miguel Perez-Santalla, vice president of Heraeus Metal Management in New York.
"Gold could reach the $1,400 mark this coming year," he added.
Spot prices have gained about 5 percent so far this month, the most since January 2017, but are still down 1.6 percent in the year to date.
"Gold started well in 2018, but a recovery in the U.S. dollar weakened prices and uncertainty on the U.S-China trade front weakened the yuan, further pulling gold down," said ABN AMRO analyst Georgette Boele.
Some stabilisation in the yuan and weakness in the dollar has helped the recent recovery in gold, she said, which has put the metal on track for its best December in a decade.
The dollar <.dxy> slipped 0.3 percent, but was set to close the year up nearly 5 percent against its rivals. Its strength helped send gold to a 20-month low in August. But the metal has since recovered about 10 percent. Gold vs stocks: https://tmsnrt.rs/2SrEAfhPolitical and economic considerations will support prices in the first quarter of 2019, said Benjamin Lu Jiaxuan, commodities analyst at Singapore-based brokerage firm Phillip Futures.
The outlook for the dollar is also more subdued going into 2019, with growing expectations that a three-year rate-hiking cycle in the United States has come to a close. Markets currently expect no rate hikes next year.
In other trading, auto catalyst metal palladium
This year it also surpassed gold for the first time since 2002 on strong demand from makers of catalytic converters.
"The key driver in this strength has been growing demand from the auto sector with stricter pollution standards in China increasing the amount of palladium used in auto catalysts," ING said in its commodities outlook for next year.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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