Gold eased on Wednesday in thin trade ahead of the New Year break, as oil prices softened and the dollar ticked up against the euro. But the precious metal is set to be one of the only commodities to post a gain year-on-year, supported by interest in bullion as a haven from risk.
Spot gold was quoted at $860.10/862.10 an ounce at 1247 GMT, down from $872.10 an ounce late in New York on Tuesday. But the metal is currently up some 3 percent from its 2007 close of $833.20, according to Reuters data. "Gold is the only (metal) that has been up this year," said Nick Moore, commodity strategist at RBS Global Banking & Markets.
"It has been a fantastic performance for gold. It has done what it should have done." In contrast, oil prices have tumbled 60 percent in 2009, while base metals look set to post their worst year on record. Interest in bullion as a haven from risk has grown amid turmoil in the global financial system, helping to counteract pressure from a strengthening dollar and a weaker oil market.
"Precious metal investors should maintain a cautious investment strategy throughout the day - especially given that no major economic data releases are due today, which might leave technical momentum signals in the driving seat." The market is likely to remain quiet on Wednesday, with London trading winding down after the 1200 GMT silver fix.
"Given the shortened sessions today, trade is likely to remain in a rangebound mood," said James Moore, an analyst at TheBullionDesk.com. Unlike gold, the other precious metals, which are primarily used in industry, look set to post losses year-on-year. Silver ended last year at $14.77 an ounce, but softened a touch on Wednesday in line with gold to $10.78/10.86 an ounce from $10.91.
Platinum fell to $904/909 an ounce from $914.50, while palladium eased to $182/187 from $183. Platinum prices look set to fall sharply on the year, having closed 2007 at $1,520 an ounce, according to Reuters data. The metal has been knocked sharply lower this year by the economic slowdown, which has curbed demand for cars. The automotive sector is responsible for around half of global platinum demand.
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