Gold prices eased on Friday as gains from a weak dollar was offset by profit-taking at the end of a year in which bullion gained about more than 8 percent, snapping three years of declines.
In the first half of 2016, investors increased gold exposure as the Federal Reserve showed caution on raising interest rates due to concerns about global growth, while Britain’s vote to leave the European Union curbed appetite for risk and pushed the metal to a two-year high in July.
Spot gold reached its highest since Dec. 14 at $1,163.14 an ounce, before retreating 0.7 percent to $1,150.5 per ounce. Prices were up about 8.5 percent annually, its biggest increase since 2011.
U.S. gold futures ended the session 0.6 percent lower at $1,151.7 per ounce.
Gold prices fell more than 8 percent in November, on higher U.S. Treasury yields after Donald Trump’s presidential election win led to speculation his commitment t infrastructure spending would spur growth.
Bullion hit a 10-month low on Dec. 15 as solid U.S. economic data gave the Fed the confidence to raise rates for the first time in a year. The central bank signalled three more increases next year from the previous projection of two.
“Because the stock market has been flirting with the 20,000 range, it’s been relatively calm and we haven’t gotten the flight to safety trade that we sometimes get with gold,” said Jeffrey Sica, president and chief investment officer of Sica Wealth Management.
“Still we are building a position in gold primarily because we think the stock market is going to hit some turbulence … and a major calamity coming out of Europe that’s going to cause a lot of money to go into the gold markets.”