By Swati Verma
(Reuters) - Gold prices are set for their strongest annual increase since 2010, as worries over global economic health triggered a surge of interest in precious metals, while palladium soared more than 50% to record highs thanks to supply shortages.
Silver and platinum, which like gold are often seen as safe investments in uncertain times, also saw their largest annual gains in several years.
Many analysts say prices are likely to rise further in 2020, with shaky growth and global stock markets potentially looking unsustainable at record highs.
Central banks are also buying more gold and have flipped from tightening to loosening monetary policy, pushing interest rates and bond yields down and making non-yielding precious metals more attractive to investors.
"An environment of low rates, persistent macro uncertainty, and elevated equities makes a case for holding gold as a hedge. This view could likely drive demand for gold higher into 2020 and lend support to the current medium-term uptrend," said Stephen Innes, a market strategist at AxiTrader.
While the United States and China cooled their trade war earlier this month, several issues remain unresolved and gold should perform well if dollar weakness plays out in 2020, he added. [USD/]
Since palladium is produced as a by-product of nickel and platinum mining, supply has been unable to keep up, with further shortfalls expected in the early 2020s.
"The market has been in a structural deficit for a few years now and that's expected to persist," said Ryan McKay, a commodity strategist at TD Securities.
"We saw deficit this year, even though the auto market has been in terrible shape. On top of that we have increased environmental regulations globally. That contributes to increased PGM loadings in the auto-catalysts."
(Reporting by Swati Verma and Karthika Suresh Namboothiri in Bengaluru; Editing by Veronica Brown and Giles Elgood)
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Updated Date: Jan 01, 2020 01:09:35 IST