* Gold in first annual loss in 13 years
* Prices down 28 percent in 2013
* Silver worst-performing precious metal in 2013
By Clara Denina
NEW YORK/LONDON, Dec 31 Gold fell to a six-month
low in thin year-end trade on Tuesday, notching up its biggest
annual decline in 32 years as prospects for global economic
recovery prompted investors to switch to riskier assets.
After a 12-year bull run, gold has shed 28 percent in 2013,
with the U.S. Federal Reserve's plan to step away from
ultra-loose monetary policy undermining the investor rationale
for holding bullion.
Years of accommodative monetary policies had propelled the
price of gold to all-time highs of $1,920.30 an ounce in
September 2011, as low interest rates encouraged investors to
put money into non-interest-bearing assets.
In choppy trade on Tuesday, spot gold fell 1 percent
to its lowest since June 28 at $1,184.50 an ounce, before
recovering its lost ground. Prices were up 0.38 percent at
$1,201.13 per ounce at 2:29 p.m. EDT (1929 GMT).
U.S. gold futures for February delivery settled at
$1,202.3, down $1.5 an ounce, having earlier fallen to a low of
$1,181.40. That was down 28 percent from the end of last year.
Bullion was the third-largest loser for the year on the
19-commodity Thomson Reuters/Core Commodity CRB index,
after corn and silver.
"For the first three months of the year at least we are
quite pessimistic on gold and a break below $1,180 could trigger
further declines to the $1,000 mark," T-Commodity partner
Ganclaudio Torlizzi said.
"Moreover, the dollar should strengthen towards the euro in
January, as the economy improves, and that's another bearish
element for gold," he added. "For the time being, investors will
continue to put their money into equities."
World stocks were ending 2013 close to six-year peaks and
benchmark bond yields were poised for their first annual rise
since 2009 as investors celebrated a pick-up in global growth
with expectations of more to come.
The dollar was on track to end 2013 modestly higher
against a basket of main currencies.
Trading on Tuesday was volatile with prices falling 1
percent in early New York trade as investors sold bullion at a
loss to offset any tax liabilities from bumper equity markets,
The market rebounded almost as quickly after prices hit
"We had a final run of tax-loss selling and then dealers
swooped in seeing it was an artificial sell-off," said Bill
O'Neill, a partner in the commodities investment firm LOGIC
Gold was also set to post hefty annual losses in other
currencies, with prices in euros down 31 percent on
the year, the first fall since 2004. Prices fell 30 percent in
Swiss francs and 29 percent in British pounds
A drop in exchange-traded fund holdings showed investors
had lost faith in bullion as a hedge against inflation and an
alternative investment after the U.S. Federal Reserve announced
plans to trim its monthly bond purchases.
Holdings in the SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, fell 0.37 percent to 798.22
tonnes on Monday, their lowest since January 2009.
In Singapore, premiums for gold bars were unchanged at $1.50
an ounce to spot London prices, while in Hong Kong, offers stood
at between $1.50 and a high of $2.00.
Silver was down 1.13 percent to $19.43 an ounce.
Silver is down 36 percent this year in its worst annual
performance since at least 1982, making it the worst-performing
precious metal in 2013.
Spot platinum was up 0.8 percent at $1,376.0 an ounce
and on course to post an 11 percent annual loss. Best-performing
palladium rose 0.9 percent to $718.10 an ounce and was
ending year up 2 percent.