BENGALURU (Reuters) - Gold was set to rise more than 9 percent in 2016, its first annual gain in four years, edging higher in the final trading session of the year on Friday on the back of a weaker dollar.
Spot gold was up 0.1 percent at $1,159.36 an ounce by 0325 GMT, having earlier hit a more than two-week high of $1,163.14 an ounce. The metal rose over one percent in the previous session, its biggest daily percentage gain since late September.
Gold has added more than 9 percent so far this year despite a steep fall in November, following three successive years of losses.
"Gold made robust gains as demand surged during the periods of economic and political uncertainty until the third quarter," said Mihir Kapadia, CEO of London-based Sun Global Investments Ltd.
The safe haven asset was poised to register its best weekly gains since early June, having risen about 2.5 percent this week. However, it is still down nearly one percent in December, and about 12 percent this quarter.
"The decline experienced by the metal during December is largely due to the market tide favouring the U.S. economy which hopes for infrastructure and spending boost under a Trump administration, which has cemented expectations of higher interest rates and higher stock prices in 2017," Kapadia said.
A rising U.S. dollar and interest rates, coupled with strong equity markets, discourages the buying of non-interest-paying bullion, which is priced in dollars.
U.S. gold futures rose 0.2 percent to $1,160.3 per ounce.
"Some of the previous headwinds that have pushed gold lower are now fading; among bearish items now no longer on the list include a stronger dollar, rising U.S. rates and buoyant equity markets," INTL FCStone analyst Edward Meir said in a note.
The market could witness a countercyclical bounce that may carry on for a few more sessions, Meir added.
The dollar index, which measures the greenback against a basket of currencies, fell 0.3 percent to 102.390.
Top consumer China's net gold imports via main conduit Hong Kong fell 17.84 percent month on month in November, data showed on Thursday.
Other precious metals were also set to end the year in positive territory. Silver was up 0.1 percent at $16.17, on track to end the year up about 17 percent.
Platinum gained 0.5 percent to $902.50, heading for yearly rise of just over over one percent, its first annual gain in four years.
Palladium edged 0.2 percent lower to $670.47, but was the best performer among precious metals for the year 2016, up over 19 percent so far.
(Reporting by Swati Verma in Bengaluru; Editing by Michael Perry and Richard Pullin)