by BLOOMBERG

LONDON • Gold ended 2021 the same way it spent much of the year: Little changed and tottering along, somewhere in the vicinity of US$1,800 (RM7,506) an oz.

After a tumultuous start to the pandemic that drove gold to record levels in 2020, the metal famously touted as a hedge against rising prices has failed to capitalise on this year’s scorching-hot inflation.

Investors appear to have lost interest, leaving gold trading in tight ranges for weeks on end, while exchange-traded fund (ETF) holdings trickle down.

Spot gold fell almost 4% last year, on track for its biggest annual decline since 2015.

A stronger US dollar and the threat of a pullback in stimulus by the world’s major central banks have deterred many investors, who saw better opportunities in surging equity markets.

The exciting booms and busts of bitcoin — often touted as a digital equivalent to bullion — also captured attention.

Gold started 2021 under pressure, dropping 10% in the first quarter. Vaccine successes spurred hopes for a quick recovery from the pandemic, while US President Joe Biden’s Democrats secured the US Senate opened the door to progrowth infrastructure programs and more fiscal aid.

Prices later rebounded after the emergence of new virus variants and political gridlock in the US. But then bullion got stuck in the doldrums.

One key factor has been a lack of interest from financial investors, who are crucial to driving gold’s rallies.

Holdings in ETFs have dropped almost 9% through the year, while hedge funds trading Comex futures have kept their bullion bets muted.

While the prospect of monetary tightening hurt gold’s appeal, prices were supported by strong demand from Asian jewellery consumers and central bank buying.

The opposing drivers have left bullion hovering almost magnetically around the US$1,800-an-oz mark.

While that’s a historically high price, it will be disappointing to those who enjoyed the surge to a record in 2020.

However, the equilibrium between dip buyers and sellers may not hold for long. More gains in the dollar could spell misery.

On the other hand, signs of persistent, runaway inflation could finally provide the spark needed for a sustainable gold rally.

BlackRock Inc’s Evy Hambro said earlier in December that gold could climb in 2022, driven by a combination of real interest rates, US dollar performance and demand for haven assets.

However, analysts at JPMorgan Chase & Co see gold coming under more pressure as the global economic recovery continues, forecasting an average price of US$1,631 an oz for 2022.

On the last day of 2021, gold edged up 0.7% to US$1,827.10 an oz by 1:38pm in New York. Bullion for February delivery fell 0.8% to settle at US$1,828.60 on the Comex. Silver and platinum also gained, while palladium declined.