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Gold on way to its worst year since 1981

goldGold fell for the first time in five days, heading for its biggest annual loss in three decades as investor holdings extended their decline to the lowest since 2009. Silver retreated for the first time in more than a week.

Bullion for immediate delivery slid as much as 0.5 percent to $1,206.81 an ounce and was at $1,207.69 by 2:23 p.m. in Singapore. Prices climbed to $1,219.28 on Dec. 27, the highest since Dec. 19, as the dollar weakened against the euro. Silver dropped as much as 1.6 percent, the first loss since Dec. 19.

Gold tumbled 28 percent this year, set for the worst annual plunge since 1981. Some investors lost faith in the metal as a store of value amid a rally in U.S. equities and an improving economy, which prompted the Federal Reserve to pare its $85 billion in monthly bond purchases. Holdings in exchange-traded funds backed by bullion dropped 33 percent this year to the least since 2009, data compiled by Bloomberg show.

“The perennial bulls have pulled their horns in,” said Jonathan Barratt, chief executive officer of Barratt’s Bulletin in Sydney. “The underlying theme has been the unanticipated weight of selling from the ETF market,” he said.

Assets in the SPDR Gold Trust, the biggest bullion-backed ETP, fell to 801.22 metric tons on Dec. 27, the lowest level since January 2009, and plunged 41 percent this year, data on the fund’s website shows.

Gold for February delivery slipped 0.6 percent to $1,206.50 an ounce on the Comex in New York. Silver for immediate delivery lost 1.5 percent to $19.7802 an ounce, tumbling 35 percent this year for the biggest slump since 1981.

Platinum fell 0.1 percent to $1,373.40 an ounce, down 11 percent this year. Palladium slid 0.2 percent to $710.18 an ounce and is poised to gain 1 percent in 2013.-Bloomberg