Gold set for worst year since 2015 on fading safe-haven demand

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 inflation.

Spot gold rose 0.1 per cent to $1,817.40 per ounce by 0647 GMT, hovering close to Tuesday’s one-month high, as a dip in US Treasury yields boosted the metal’s appeal by reducing its opportunity cost. US gold futures rose 0.3 per cent to $1,818.90.

“Year-end risk hedging has pushed gold higher overnight and is keeping gold supported in Asia, despite a modest US dollar rally overnight. Gold is now just below resistance at $1,820,” said Jeffery Halley, a senior market analyst at OANDA.

A stronger dollar makes bullion more expensive for buyers holding other currencies. Gold prices have declined more than 4 per cent so far this year after rising 48 per cent in the last two years, as the global economic recovery reduced demand for the safe-haven metal.

This year gold traded between $1,676 and $1,959 an ounce, following its best annual performance in a decade last year, which also saw the metal touching an all-time high of about $2,072.50.