Weekly Round-Up: Gold Price on Track for Best Year Since 2010

The gold price reached its highest point in two and a half months on Friday (December 29), putting it on track for its biggest yearly increase since 2010. 
According to Reuters, the yellow metal reached $1,303.90 per ounce that day as the US dollar hit a three-month low. The dollar looks set to record its worst performance since 2003, while gold is currently up about 15 percent year-to-date.
This year, gold has been pushed upward by factors such as geopolitical tensions centering on North Korea and Russia, along with low US inflation; those same issues have hurt the dollar’s prospects.

“The dollar is the most important driver, and then real yields. The Fed is increasing rates, but the dollar’s not profiting,” said ABN Amro analyst Georgette Boele. The US Federal Reserve has hiked rates three times in 2017, and at least three more hikes are expected next year.
Higher interest rates tend to impact gold negatively, as they reduce the appeal of non-yielding bullion. However, this year’s hikes were largely priced in before they happened. And many market watchers remain positive about gold’s prospects heading into 2018.
For its part, silver was trading at $17.01 per ounce as of 12:32 p.m. EST on Friday, up about 7 percent since the beginning of the year. In a recent poll conducted by Kitco, respondents said they believe the white metal will outperform gold, palladium, platinum and copper in 2018.
Of those five metals, palladium has by far put on the best performance in 2017. It reached a fresh 17-year high of $1,069.50 per ounce on Wednesday (December 27), and is currently up over 50 percent year-to-date. Platinum has put on a much more subdued performance and looks set to end the year flat. Palladium has been driven largely by high demand and persistently short supply.
Despite palladium’s impressive gain, copper should not be overlooked. The base metal hit a four-year high earlier this week, and like gold was on track for its largest annual gain since 2010. As of 1:01 p.m. EST on Friday, copper was up just over 30 percent since the start of 2017.
Oil prices also look set to end the year on a high note. According to Reuters, prices for US West Texas Intermediate crude rose to their highest level since mid-2015 on Friday, while Brent crude futures rose as well. The former is up 12 percent year-to-date, while the latter has seen a rise of 17 percent.
Over the course of the year, oil prices have been supported by production cuts by OPEC. However, heading into the new year market watchers believe higher US shale production could put a damper on prices. “The U.S. shale impact is now encroaching on uncharted territory,” Reuters quotes RBC Capital Markets analyst as saying earlier in December.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.