Gold
headed for the biggest slump in three decades and the first annual loss since
2000 as an improving economy cut demand for wealth protection. Silver was
poised for the worst annual performance since 1981.
Bullion
fell 28 percent this year to $1,200.49 an ounce in Singapore.
Investors lost faith in the metal as a store of value as equities rallied and
an economic recovery prompted the Federal Reserve to pare its $85 billion in
monthly bond purchases. Silver dropped 36 percent to
$19.4741 an ounce.
Assets
in exchange-traded products backed by gold fell 33 percent
to the lowest since 2009 amid sales by billionaires George Soros and John
Paulson. Disposals of 864.8 metric tons in 2013 were more than the combined
inflows in the previous three years. The Standard & Poor’s 500 Index
climbed 29 percent and is
set for its best year since 1997, while the International Monetary Fund signaled this month the U.S. economy will expand more than
forecast.
Consumption
in China, poised to overtake India as the biggest buyer this year, may increase
29 percent to 1,000 tons in 2013, the World Gold
Council estimates. Gold in Europe is being refined from larger bars suitable
for local users into smaller sizes favored in Asia,
while Deutsche Bank AG and UBS AG are among banks opening vaults in the region
this year.
Physical
demand, most notably from China, may help stem the potential for further
losses, James Steel, an analyst at HSBC Securities (USA) Inc., wrote in a note of
30 Dec. The drop below $1,200 this month boosted Chinese demand, he said.