Gold fell one percent in thin holiday trade on Monday, heading for its biggest annual loss in more than three decades at nearly 30 percent, as rising appetite for risk and the prospect of a global recovery stole its shine.
European stocks hovered around five-year highs after two weeks of strong gains, following from a six-year peak in Japanese shares.
Spot gold fell to a session low of $1,200.79 an ounce in earlier trade and was down 0.8 percent to $1,202.54 by 1228 GMT, while U.S. gold futures for February delivery slipped $11.60 to $1,202.40 an ounce.
Gold’s performance in 2013 has put an end to 12 straight years of growth, with prices hit by the U.S. central bank’s decision to rein in its monetary stimulus, which will raise the opportunity cost of holding the non-yielding asset.
Expectations that the U.S. economy will improve and the rest of the world’s growth will stabilise in 2014, have further undermined the case for holding bullion, as investors look to put their money in riskier assets like equities.
In wider markets, the dollar ticked 0.2 percent lower versus a basket of currencies, while the 10-year U.S. notes yield steadied below a two-year high above 3.0 percent.