Gold heads for first annual gain since 2020 as traders bet US Fed will dial back interest rates in 2024

Concerns around recession risks also boost the case to own debt, with traders betting global central bankers may have to aggressively cut rates to bolster growth. Such views have seen bullion gain nearly 13 per cent since October 6 amid declines in Treasury yields and the dollar, which is on pace for its worst year since 2020.

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Chinese consumers sell off old jewellery amid record high gold prices

Chinese consumers sell off old jewellery amid record high gold prices

Gold surged to a record high in early December as traders bet the US central bank will start cutting rates at a sharper pace next year, only to quickly give up those gains when those positions were seen as overdone. It surged above US$2,000 again in mid-December after Fed officials in their last meeting of the year gave the clearest signal yet that an aggressive rate hike campaign is over.

One important force behind gold’s strength has been central banks’ record buying of the haven asset. Such ferocious purchases help bullion trade at a significant premium to real Treasury yield — one of its biggest drivers — on a historical basis.

Gold has also been underpinned by factors including geopolitical uncertainty, with 41 per cent of the world’s population due to go to the polls in 2024.

Spot gold was at US$2,062.98 per ounce by 1pm Hong Kong time on Friday, the last trading day of the year, little changed from the previous session. U.S. gold futures settled 0.6 per cent lower at US$2,071.80.