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Gold’s December Rally Stays Alive to Seal Best Year Since 2010

(Bloomberg) –Gold climbed to a three-month high to clinch its best annual performance since 2010, as a weaker dollar helped cap a year marked by global economic jitters and trade frictions.

Bullion has gained 19% this year as central banks globally embraced looser monetary policy to boost growth. Brexit, unrest in regions from Chile to Hong Kong and buying sprees from key central banks and exchange-traded funds have also helped support prices.

Spot gold climbed as much as 0.7% to $1,525.38 an ounce on Tuesday, the highest since Sept. 25, and traded at $1,521.20 by 7:35 a.m. in New York. The Bloomberg Dollar Spot Index fell to the lowest since June.

Still, some analysts doubt that gold’s strength will stick next year and JPMorgan Asset Management cautioned that bullion may not offer sound portfolio protection.

“There are very few certain environments in which gold does well, and it’s not necessarily the case that 2020 won’t be any of those,” Hannah Anderson, a global market strategist at JPMorgan, said in an interview with Bloomberg TV. “In the next downturn, I do believe that bonds still could be defensive assets.”

JPMorgan has come out this month to make the case for a risk-on investment allocation for 2020 as the global economy gathers momentum in the wake of the recent slowdown. On Tuesday, data showed China’s manufacturing sector continued to expand output in December, adding to evidence that the world’s second-largest economy is stabilizing.

Commentary out of China and the U.S. suggest that both countries are committed to their phase-one trade pact. However, haven asset demand in 2020 could be supported by other brewing global tensions, DailyFX strategist David Song said in a note.

“The threat of a U.S.-EU trade war may become a greater concern,” he said.

In other precious metals, silver has risen 16% this year, also poised for its best performance since 2010. Platinum is up 22% and top-performer palladium is set to end 2019 with an annual gain of 52%.

–With assistance from Selina Wang, David Ingles and Karolina Miziolek.

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