Gold Futures Fall After Dollar Rebounds as Greek Debt Negotiations Stall

Gold prices dropped the most in a week as the dollar rebounded from a two-week low, reducing demand for the precious metal as an alternative asset.

The greenback rose as much as 0.5 percent against a basket of currencies after European policy makers and Greek bondholders failed to reach agreement on a debt-swap plan. The MSCI All- Country World Index of equities declined as much as 1 percent.

“The markets are taking a hit because everyone was expecting Greece to come up with a plan,” Adam Klopfenstein, a market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “People are largely in a ‘risk- off’ mode today.”

Gold futures for February delivery dropped 0.8 percent to settle at $1,664.50 an ounce at 1:45 p.m. on the Comex in New York, the biggest decline for a most-active contract since Jan. 13. Yesterday, the metal reached $1,681.80, the highest since Dec. 12.

Gold “may be vulnerable to profit-taking, with physical buying reduced due to Chinese holidays,” James Moore, an analyst at TheBullionDesk.com in London, said in a report.

Financial markets in Asian countries including China and South Korea were closed for the Lunar New Year holiday.

In gold options, the most-actively traded contracts were February $1,650 puts at 1,324 lots as of 2:33 p.m.

Silver futures for March delivery fell 0.9 percent to $31.975 an ounce.

On the New York Mercantile Exchange, platinum futures for April delivery fell 0.6 percent to $1,552.40 an ounce. Palladium futures for March delivery dropped 1.2 percent to $680.55 an ounce.

To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Debarati Roy in New York at droy5@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.