Gold Futures Fall to Lowest Closing Price in Three Weeks on Dollar's Gain

Gold futures closed at the lowest price in three weeks as the dollar’s rally curbed demand for the precious metal as an alternative investment.

The greenback advanced for the fourth time in five sessions against a basket of major currencies on speculation that the Federal Reserve will buy less debt than analysts projected in an effort to revive the economy. From Sept. 1 to Oct. 20, the dollar dropped 6.5 percent, while gold climbed to a record 16 times, reaching $1,388.10 an ounce on Oct. 14, the highest ever.

“The longer-term question will be on how much of the Fed’s action has already been priced in,” said Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago.

Gold futures for December delivery fell $16, or 1.2 percent, to settle at $1,322.60 an ounce at 1:39 p.m. on the Comex in New York, the lowest closing price for a most-active contract since Oct. 4. The metal dropped for the fourth time in five sessions.

Assets of the metal in exchange-traded-products declined 0.28 metric ton to 2,096.13 tons yesterday, the eighth straight drop, according to data compiled by Bloomberg from 10 providers. Holdings are up 17 percent this year and reached a record 2,104.65 tons on Oct. 14.

The next Fed policy meeting starts on Nov. 2. The central bank has kept its benchmark interest rate at zero percent to 0.25 percent since December 2008 and purchased Treasuries and mortgage-backed securities in a bid to spur growth.

“With the Fed poised to print more money, we expect dips will be viewed favorably by investors, with longer-term concerns about inflation and debasing of fiat currencies,” said James Moore, an analyst at TheBullionDesk.com in London.

Silver Retreats

Silver futures for December delivery fell 42.6 cents, or 1.8 percent, to $23.404 an ounce.

The U.S. Commodity Futures Trading Commission’s Bart Chilton yesterday said “repeated efforts” took place to influence prices.

“There have been fraudulent efforts to persuade and deviously control that price,” Chilton said at a hearing in Washington, alleging that violations of the Commodity Exchange Act occurred. The agency yesterday proposed new rules against manipulation.

Should Chilton’s allegations prove to be true, “it could lead to further volatility and higher prices,” Goldcore Ltd. in Dublin said in a report.

Platinum futures for January delivery dropped $25.90, or 1.5 percent, to $1,678.10 an ounce on the New York Mercantile Exchange.

Palladium futures for December delivery fell $6.30, or 1 percent, to $619.15 an ounce. Earlier, the price reached $639.50, the highest level since June 2001. This year, the commodity has jumped 51 percent, the most among the precious metals.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

To contact the editor responsible for this story: Patrick McKiernan at pmckiernan@bloomberg.net

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