Gold was set on Friday for its worst year since 2015 as a global economic recovery from last year’s contraction robbed the metal of safe-haven flows and as central banks prepared to raise interest rates to contain persistently high inflation.
Spot gold rose 0.2% to $1,817.78 per ounce by 0529 GMT, hovering close to Tuesday’s one-month high, as a dip in U.S. Treasury yields boosted the metal’s appeal by reducing its opportunity cost. U.S. gold futures were up 0.3% to $1,818.70.
Gold prices have declined more than 4% so far this year after rising 48% over the previous two years, as the global economic recovery reduced demand for the safe-haven metal.
“Gold held up reasonably well given all the pro-growth development and all the normalisation in monetary policy,” said Dominic Schnider, head of commodities and APAC forex at UBS Wealth Management in Hong Kong.
“You could argue that if we did not have inflation, gold prices would already be much lower,” said Schnider, adding gold’s performance for the year was quite positive for euro or yen investors.
Benchmark 10-year U.S. Treasury yields dipped from one-month highs, with no major catalysts to drive market direction and many traders out before the New Year holiday.
The dollar index (.DXY) was up 0.1% at 96.048, capping gains in gold as a stronger dollar makes bullion more expensive for buyers holding other currencies.
Wall Street closed lower on Thursday, retreating late in thin holiday volume from record highs set early in the session on strong data, including a drop in weekly claims for U.S. unemployment benefits.
Spot silver rose 0.3% to $23.10 an ounce and platinum rose 0.2% to $963.46, while palladium fell 1% to $1,947.78.
For the year, spot silver was on track for its worst year since 2014, falling over 12%. Platinum dropped nearly 10%, and palladium was headed for its biggest yearly decline since 2015 with an over 20% slide.