By Stuart Wallace
Dec. 31 (Bloomberg) — Gold headed for a record eighth annual gain in London on expectations that the dollar and global economies will weaken, bolstering demand for the metal as a hedge against further declines in the currency and as a haven.
Gold rose 3 percent this year, preserving investors’ money as $30 trillion was wiped off equities and the Reuters/Jeffries CRB Index of 19 raw materials headed for its worst year in a half-century. The dollar index, measuring the currency against six counterparts, fell this month after the Federal Reserve cut its benchmark interest rate to a range of zero to 0.25 percent.
“What’s really driving gold at the moment is pressure on the dollar from the Fed lowering interest rates relative to other foreign currencies and other central banks,” David Meger, a senior analyst at Alaron Trading Corp., said from Chicago, predicting that bullion will trade at $840 to $880 an ounce in the first quarter of 2009.
The metal is the second-best performer in the UBS Bloomberg CMCI Index of 26 commodities this year, behind cocoa. The gains attracted money from investors seeking to diversify their portfolios. Gold in the SPDR Gold Trust, the largest exchange- traded fund backed by bullion, reached a record, overtaking Japan as the world’s seventh-largest gold holding.
Gold for immediate delivery fell $14.61, or 1.7 percent, to $859.09 an ounce as of 1:41 p.m. in London. This year’s advance would be the smallest since 2001. Futures for February fell $10.40, or 1.2 percent, to $859.60 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange.
Gold Producers
Priced in pounds, gold reached a record yesterday, and in euros the metal has advanced about 8.2 percent this year. . .
“Gold remains the best performing metal for 2008,” Jonathan Barratt, managing director of Commodity Broking Services in Sydney, said in an e-mailed note today. “All roads point to gold continuing its ascent in 2009.”
Among other metals for immediate delivery, silver dropped 18 cents, or 1.6 percent, to $10.78 an ounce, extending its annual decline to 27 percent. That’s its worst performance since 1984.
Platinum fell $9.50, or 1 percent, to $907.50 an ounce, for an annual decline of 41 percent, the worst loss since at least 1988. Palladium declined $1.25, or 0.7 percent, to $184 an ounce, dropping 50 percent this year, the steepest plunge since 2001.
Platinum and palladium prices fell after a collapse in car sales. The metals are used in autocatalysts that remove noxious fumes from exhausts.
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