Gold firms, set to break three-year losing streak

[BENGALURU] Gold was set to rise more than 9 per cent in 2016, its first annual gain in four years, edging higher in the final trading session of the year on Friday on the back of a weaker US dollar.

Spot gold was up 0.1 per cent at US$1,159.36 an ounce by 0325 GMT, having earlier hit a more than two-week high of US$1,163.14 an ounce. The metal rose over one per cent in the previous session, its biggest daily percentage gain since late September.

Gold has added more than 9 per cent so far this year despite a steep fall in November, following three successive years of losses.

"Gold made robust gains as demand surged during the periods of economic and political uncertainty until the third quarter," said Mihir Kapadia, CEO of London-based Sun Global Investments Ltd.

The safe haven asset was poised to register its best weekly gains since early June, having risen about 2.5 per cent this week. However, it is still down nearly one per cent in December, and about 12 per cent this quarter.

"The decline experienced by the metal during December is largely due to the market tide favouring the US economy which hopes for infrastructure and spending boost under a Trump administration, which has cemented expectations of higher interest rates and higher stock prices in 2017," Mr Kapadia said.

A rising US dollar and interest rates, coupled with strong equity markets, discourages the buying of non-interest-paying bullion, which is priced in dollars.

US gold futures rose 0.2 per cent to US$1,160.3 per ounce.

"Some of the previous headwinds that have pushed gold lower are now fading; among bearish items now no longer on the list include a stronger dollar, rising US rates and buoyant equity markets," INTL FCStone analyst Edward Meir said in a note.

The market could witness a countercyclical bounce that may carry on for a few more sessions, Mr Meir added.

The US dollar index, which measures the greenback against a basket of currencies, fell 0.3 per cent to 102.390.

Top consumer China's net gold imports via main conduit Hong Kong fell 17.84 per cent month on month in November, data showed on Thursday.

Other precious metals were also set to end the year in positive territory. Silver was up 0.1 per cent at US$16.17, on track to end the year up about 17 per cent.

Platinum gained 0.5 per cent to US$902.50, heading for yearly rise of just over over one per cent, its first annual gain in four years.

Palladium edged 0.2 per cent lower to US$670.47, but was the best performer among precious metals for the year 2016, up over 19 per cent so far.

REUTERS