Gold ended the year on a high note on Monday on hopes that the US could avert going over the so-called fiscal cliff as politicians in Washington remain locked in eleventh hour talks.
Investors have been worried that when on January 1 nearly $600 billion worth of spending cuts and tax increases are triggered it would put the country's economy in danger of sliding back into severe recession.
Spot gold was trading $22.20, or 1.3% higher at $1,677.10 an ounce in afternoon dealings on the Comex division of the New York Mercantile Exchange.
Gold ended 2011 at $1,564 an ounce and the $113 or 7% increase in 2012 means the yellow metal has now enjoyed a dozen years of consecutive gains. March contracts for silver closed up under 1% at $30.23 an ounce, a gain of 8.3% for 2012.
Volatility in the gold price eased in 2012 after the wild gyrations of 2011 which saw the gap between the year’s highs and lows coming in at close to $600 an ounce or a 32% range.
Gold hit its lowest point for the year – an intraday trade of $1,528 – on May 16 this year compared to a high of $1,789 struck at the end of February; a $261 trading range.
The most volatile year for the gold price was 1980 when the metal highs and lows were 40% apart following the 21 January 1980 record of $850 a ounce.
Just like the pullback in August 2011 when the price fell $105 in a single day shortly after reaching the all-time high above $1,900, in 1980 gold fell also precipitously after setting the record – within two days it fell back to under $700 starting a bear market that lasted almost three decades.
Gold breached $850 again at the start of 2008, but in inflation adjusted terms the 1980 price is still the highest ever – gold would have to hit some $2,400 an ounce to set a record in today's money.