RTRS:PRECIOUS-Gold steady, but set for biggest annual loss in three decades
* Gold holds above $1,200 in thin trade
* Prices head for biggest annual drop since 1981
* Traders see further price drops in 2014
(Updates prices)
By A. Ananthalakshmi
SINGAPORE, Dec 26 (Reuters) - Gold was little changed on
Thursday in thin year-end trade, but looked set to post its
biggest annual loss in more than three decades as rallying
equities and optimism about a global economic recovery dented
its safe-haven appeal.
Worries this year that the U.S. Federal Reserve will begin
unwinding its stimulus and then the recent decision to do so has
also hurt bullion that is seen as a hedge against inflation.
Gold is headed for a near 30 percent slump in 2013 -- ending
a 12-year rally prompted by rock bottom interest rates and
measures taken by global central banks to prop up the economy.
Spot gold was flat at $1,204.70 an ounce by 0724 GMT.
The decline this year is set to be gold's biggest loss since
1981, while the current price is 37 percent below an all-time
high of $1,920.30 hit in 2011.
Analysts and traders expect prices to drop further next
year, but not to the same extent.
"Early next year we could test the $1,000 level but I don't
expect prices to decline as much as this year. From mid year
onwards, depending on economic data, there could be some
recovery," said one Hong Kong-based precious metals trader.
This year, a combination of a recovering global economy,
rallying stock markets and stubborn low inflation in the United
States have erased gold's appeal as a safe-haven and as a hedge
against rising prices.
U.S. stocks are on track to become the top investment in
2013, with the S&P 500 index on course to mark its best year
since 1997. Japanese stocks are a close second.
"Gold is going to struggle again next year unless the stock
markets see a correction," said another trader.
Several brokerages such as Goldman Sachs, BNP Paribas and
Societe General expect gold prices to drop below $1,150 in 2014.
"I doubt we'll see prices going below $1,000 as miners would
start shutting mines then and supply issues would boost prices
again," said the second trader.
Physical demand, which had climbed to peak levels earlier
this year as gold prices fell sharply, has now cooled -
lessening its support for prices.
Silver is down 36 percent for the year, its worst annual
performance since at least 1982.
PRICES AT 0724 GMT
Metal Last Change Pct chg YTD pct chg
