Gold price steady but set for biggest annual loss in 3 decades
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Gold price 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 $1,204.49 an ounce by 0349 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 $1,050 in 2014.
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