Gold heads for best year in a decade with dollar on the ropes

Gold is poised to cap the biggest annual advance in a decade after a tumultuous year, with gains this month aided by the dollar’s decline to the lowest level since April 2018. Silver has surged almost 50% in 2020.

Bullion hit a record in August as investors sought haven assets amid the pandemic. The surge was buttressed by unprecedented waves of stimulus, including from the Federal Reserve, which fanned concerns of currency debasement. Holdings in bullion-backed exchange-traded funds set an all-time high in October, although they’ve since ebbed with the roll-out of vaccines.

Gold for immediate delivery was 0.2% higher at $1 897.67 an ounce at 10:18 a.m. in Singapore. That’s up 6.8% this month, and 25% higher over 2020, poised for the biggest full-year advance since 2010. The Bloomberg Dollar Spot Index is heading for a third, straight quarterly loss.

Ahead of 2021, some banks have signalled that the traditional haven may now struggle to extend its gains. Gold and other precious metals will likely come under pressure next year as financial markets normalise and the yield curve steepens, Morgan Stanley said in a note earlier this month.

Others have struck a more positive tone. While bullion’s rally has been blunted by vaccine progress, there’s still support from monetary and fiscal policies, according to HSBC Securities (USA) Inc. A Joe Biden administration may be gold-positive from a fiscal-spending perspective, it said in a December 9 note.

Spot silver traded at $26.6448 an ounce, up 49% this year. Palladium is on course for a fifth consecutive annual gain, with a rise of more than 20% in 2020. Platinum has climbed 11%.

© 2020 Bloomberg