Singapore: Gold’s image as a haven asset has taken a battering with the metal capping its longest slump in more than 30 years as investors sold from bullion-backed funds.
Bullion futures fell for a sixth-straight quarter, the longest slump since 1984, and lost 10 per cent in 2015. Prices, which were little changed on Thursday, plunged about 45 per cent since reaching a record high in 2011.
The metal booked its third annual loss, the longest run since 1998, as the dollar surged on the back of tighter monetary policy in the United States, joining a collapse in prices of commodities from iron ore to oil. Holdings in gold exchange-traded products have declined 10 times in the last 13 sessions to 1,466.4 metric tons, near the lowest in more than six years.
“Gold is suffering from the general exodus out of commodity investments,” Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, said by e-mail. “Being one of the most-traded commodities through ETFs (exchange traded funds), the selling pressure from paper investors has been felt particularly hard and gold’s safe-haven status has suffered.”
Gold futures for February delivery added less than 0.1 per cent to settle at $1,060.20 an ounce on the Comex in New York. The metal reached a five-year low earlier this month. Prices may approach $1,000 in 2016, before recovering toward $1,200 by the end of the year as the dollar and bond yields retreat, Hansen said.
The US Federal Reserve raised borrowing costs for the first time in almost a decade this month, and traders are now focusing on the pace of further rate increases. While HSBC Holdings predicts just two moves next year, Goldman Sachs is among banks that see four. Bullion will drop to $950 by the end of next year, according to Barnabas Gan, an economist at Oversea-Chinese Banking who’s the top-ranked precious-metals forecaster.
Money managers have been betting on more price declines since November, US Commodity Futures Trading Commission data show. Earlier this month, they held the biggest net-short position since at least 2006.
“The CFTC data is showing very low net-long speculative positions, indicating that speculators aren’t nearly as bullish as they’ve been in a very long time,” Greg King, the chief executive officer of REX Shares, said in a telephone interview.
Silver futures also fell for a third year, dropping 12 per cent to $13.803 an ounce on the Comex in 2015.
Palladium slumped 30 per cent, the most since 2008, while platinum lost 26 per cent. The two metals, used in catalytic converters that curb car and truck emissions, dropped this year as China’s slowdown helped reduce demand and mine output from South Africa increased. The Volkswagen emissions scandal also hurt prospects for consumption.