By A. Ananthalakshmi
SINGAPORE, Dec 31 (Reuters) - Gold was little changed on the
last trading session of the year, but looked set to post its
third straight annual loss, undermined by a robust dollar and
prospects of higher U.S. interest rates.
Investors have sold off the metal, down about 10 percent for
the year, on fears that higher U.S. interest rates would dent
the appeal of non-interest-paying bullion.
Other precious metals have also been hit by the strength in
the dollar and slump in gold, and were headed for sharp annual
declines.
Spot gold XAU= edged up 0.2 percent to $1,062.50 an ounce
by 0331 GMT on Thursday. Volumes were thin ahead of the new year
holiday on Friday.
It slid to a near-six-year low of $1,045.85 earlier in
December.
"Next year too gold will be lower as U.S. interest rates
will keep going higher," said a bullion trader in Hong Kong,
adding that this will put pressure on other precious metals as
well.
Gold could drop to $1,000 or below but could recover
slightly in the second half of the year, he said.
The outlook for the metal does not look bullish heading into
the next year.
Gold prices have been influenced a great deal by U.S.
monetary policy. The Federal Reserve increased U.S. interest
rates for the first time in nearly a decade in December, and is
expected to hike rates at a gradual pace in 2016.
That could support the dollar, which is on track to gain 9
percent this year against a basket of major currencies. USD/
A stronger greenback makes dollar-denominated gold more
expensive for holders of other currencies.
"The pace of increasing interest rates is going to be slow
but still that would depress gold prices," said Mark To, head of
research at Hong Kong's Wing Fung Financial Group.
Physical demand in top consumers China and India will not be
strong enough to support a price rally, he said.
Other fundamentals were also not supportive of an uptick in
prices.
Assets of SPDR Gold Trust GLD , the top gold-backed
exchange-traded fund, are near a seven-year low, while short
positions on COMEX gold contracts are close to an all-time high.
A bearish outlook for oil could pile more pressure on gold.
Gold is positively co-related to oil as the metal is often seen
as a hedge against oil-led inflation. O/R
Among other precious metals, silver XAG= looked set to end
the year down about 11 percent.
Platinum XPT= was headed for a 27 percent decline, its
worst annual performance since 2008.
With a 31 percent drop, palladium XPD= was the worst
performer among the precious metals.
PRICES AT 0331 GMT
Metal Last Change Pct chg
Spot gold 1062.5 1.8 0.17
Spot silver 13.963 0.103 0.74
Spot platinum 870.4 0.4 0.05
Spot palladium 550 8.43 1.56
Comex gold 1062.1 2.3 0.22
Comex silver 13.94 0.098 0.71
COMEX gold and silver contracts show the
most active months
SINGAPORE, Dec 31 (Reuters) - Gold was little changed on the
last trading session of the year, but looked set to post its
third straight annual loss, undermined by a robust dollar and
prospects of higher U.S. interest rates.
Investors have sold off the metal, down about 10 percent for
the year, on fears that higher U.S. interest rates would dent
the appeal of non-interest-paying bullion.
Other precious metals have also been hit by the strength in
the dollar and slump in gold, and were headed for sharp annual
declines.
Spot gold XAU= edged up 0.2 percent to $1,062.50 an ounce
by 0331 GMT on Thursday. Volumes were thin ahead of the new year
holiday on Friday.
It slid to a near-six-year low of $1,045.85 earlier in
December.
"Next year too gold will be lower as U.S. interest rates
will keep going higher," said a bullion trader in Hong Kong,
adding that this will put pressure on other precious metals as
well.
Gold could drop to $1,000 or below but could recover
slightly in the second half of the year, he said.
The outlook for the metal does not look bullish heading into
the next year.
Gold prices have been influenced a great deal by U.S.
monetary policy. The Federal Reserve increased U.S. interest
rates for the first time in nearly a decade in December, and is
expected to hike rates at a gradual pace in 2016.
That could support the dollar, which is on track to gain 9
percent this year against a basket of major currencies. USD/
A stronger greenback makes dollar-denominated gold more
expensive for holders of other currencies.
"The pace of increasing interest rates is going to be slow
but still that would depress gold prices," said Mark To, head of
research at Hong Kong's Wing Fung Financial Group.
Physical demand in top consumers China and India will not be
strong enough to support a price rally, he said.
Other fundamentals were also not supportive of an uptick in
prices.
Assets of SPDR Gold Trust GLD , the top gold-backed
exchange-traded fund, are near a seven-year low, while short
positions on COMEX gold contracts are close to an all-time high.
A bearish outlook for oil could pile more pressure on gold.
Gold is positively co-related to oil as the metal is often seen
as a hedge against oil-led inflation. O/R
Among other precious metals, silver XAG= looked set to end
the year down about 11 percent.
Platinum XPT= was headed for a 27 percent decline, its
worst annual performance since 2008.
With a 31 percent drop, palladium XPD= was the worst
performer among the precious metals.
PRICES AT 0331 GMT
Metal Last Change Pct chg
Spot gold 1062.5 1.8 0.17
Spot silver 13.963 0.103 0.74
Spot platinum 870.4 0.4 0.05
Spot palladium 550 8.43 1.56
Comex gold 1062.1 2.3 0.22
Comex silver 13.94 0.098 0.71
COMEX gold and silver contracts show the
most active months