While not quite as impressive as their 2011 run, gold exchange traded funds have experienced another golden year, with prices on bullion heading for the 12th consecutive annual gain.
Gold has been performing as central banks around the world took aggressive steps to revive economic growth. Bullion acts as a hedge against inflation and depreciating currencies. Additionally, the precious metal also serves as a type of safe-haven investment against potential bumps down the road.
“The problems we’ve seen over the last year haven’t disappeared,” Thorsten Proettel, a commodities analyst at Landesbank Baden Wuerttemberg, said in a Bloomberg article. “There is still lots of potential for trouble in the world and that is a good reason for people to stay in gold or buy more.”
Gold futures were about 1% higher on the last trading day of 2012 amid reports Washington is very close to a deal on the U.S. fiscal cliff.
“Fiscal Cliff negotiators are still working but investors are taking a very cautious approach and gold as a general haven is viewed as an important asset,” George Gero, precious metals strategist at RBC Wealth Management, said on TheStreet.