December 31, 2013 / 3:32 AM / in 4 years

PRECIOUS-Gold on track for biggest annual loss since 1981

* Gold set to end this year down around 28 percent
    * ETF holdings lowest since 2009
    * Coming Up: U.S. Consumer confidence 1500 GMT

 (Updates prices)
    By Lewa Pardomuan
    SINGAPORE, Dec 31 (Reuters) - Gold staged a modest rebound
on Tuesday after falling more than 1 percent in the previous
session, but the precious metal was still heading for its
biggest annual decline in more than three decades because
investors shifted money to equities. 
     A drop in exchange-traded funds holdings shows investors 
lost faith in bullion as a hedge against inflation and an
alternative investment after the U.S. Federal Reserve announced
plans to trim in its big monthly bond purchases. 
     Gold rose $3.40 to $1,199.40 an ounce by 0704 GMT,
but was set to end this year down around 28 percent. Prices were
sharply lower than all-time highs above $1,900 in 2011, when a
worsening debt crisis in Europe sparked buying.
     Bullion tumbled to a six-month low around $1,185 on Dec. 20
after the Fed's decision to scale back its bond-buying stimulus
prompted a sell-off.
     "For the next quarter, precious metals as a whole still
look weak. We might see gold, especially during the first
quarter, test the lows of this year, which are not far away,"
said Brian Lan, managing director of GoldSilver Central Pte Ltd
in Singapore
    "I think the next level to test is $1,088. The U.S. economy
will look to recover and the stock market is also looking much
more attractive at this moment," he said. 
    U.S. gold fell 0.42 percent to $1,198.70 an ounce.  
    
    Global stocks are closing out 2013 sitting on sizable gains
courtesy of super-easy monetary policies and an improving
economic outlook, though some emerging markets have less to crow
about as funds return to rich-world assets. 
    The Fed provided a concrete example of that optimism when it
started curtailing its unprecedented monetary stimulus, based on
the strength of recent signals from the economy. 
    As investors abandoned gold, SPDR Gold Trust, the
world's largest gold-backed exchange-traded fund, said its
holdings fell 0.37 percent to 798.22 tonnes on Monday from
801.22 tonnes on Friday. 
    In terms of ounces, holdings fell to
25,663,578.79 - their lowest since 2009 - from 25,760,019.68.
 
    "We don't have much to add to our short-term view on gold,"
Edward Meir, an analyst at INTL FC Stone, said in a report.
    "The complex will likely remain under pressure going into
the New Year and we think it's just a matter of several more
trading days before the June 2013 low of $1,179 is taken out,"
he added, referring to U.S. gold futures.
    The physical market was deserted on the last trading day of
2013. In Singapore, premiums for gold bars were unchanged at
$1.50 an ounce to the spot London prices, while in Hong Kong,
offers stood at between $1.50 and a high of $2.00 as some
suppliers were running out of stocks. 
    China's net gold imports from Hong Kong fell 42 percent to
below 100 tonnes in November, reflecting a drop in demand from
jewellers and retail investors after strong purchases in recent
months. 
        
  Precious metals prices 0704 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1199.40    3.40   +0.28    -28.37
  Spot Silver        19.45   -0.10   -0.51    -35.77
  Spot Platinum    1359.49    3.99   +0.29    -11.43
  Spot Palladium    709.00    3.00   +0.42      2.46
  COMEX GOLD FEB4  1198.70   -5.10   -0.42    -28.47        12535
  COMEX SILVER MAR4  19.47   -0.15   -0.74    -35.76         5432
  Euro/Dollar       1.3790
  Dollar/Yen        104.93
 
  COMEX gold and silver contracts show the most active months
 
     

 (Editing by Richard Borsuk and Subhranshu Sahu)

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