Gold soars toward largest annual gain since 2010 on dollar boost

NEW YORK/LONDON — Gold extended its rally to a threemonth high on Friday, leaping toward its biggest one-year rise in seven years as a wilting US dollar, political tensions and receding concerns over the impact of US interest rate hikes fed into its rally.

Gold’s gains coincide with the greenback, in which gold is priced, sliding toward its worst year since 2003, damaged by tensions over North Korea, the Russian scandal surrounding US President Donald Trump’s election campaign, and persistently low US inflation.

The dollar index touched three- month lows on Friday, lifting bullion to its highest level since late September at $1,307.60 an ounce before paring gains.

Strong charts, the weaker dollar and expectations of bullish fundamental factors ahead have bolstered gold prices in year-end trade, said David Meger, director of metals trading for High Ridge Futures in Chicago.

Spot gold prices were up 0.67% at $ 1,303.37 per ounce by 2: 05 p.m. EST (1905 GMT), poised to finish 2017 up 13%. Benchmark US gold futures settled up $12.10, or 0.93%, at $1,309.30 per ounce, finishing the year 12% higher.

“Going back to the last Fed meeting with its slightly more dovish tone, commodities markets have gotten a bit of a green light,” Mr. Meger said, referring to signs last month the US central bank will keep its rate outlook unchanged in 2018.

“This recent bout of weakness in the dollar certainly is fostering a commodities rally and we’ve seen a light downturn in equities as well.”

Gold will be vulnerable this year to a rebound in the currency, as well as any gains in yields, ABN Amro analyst Georgette Boele said. The opportunity cost of holding non-interest bearing bullion increases when yields rise elsewhere.

Palladium eased 0.31% to $1,062.05 an ounce, having hit its highest level since February 2001 at $1,072 in the previous session. Silver was up 0.51% at $16.926, paring gains from a one-month high of $17.111. Platinum was up 0.11% at $924 after touching a four-week high of $936.20. —