Gold Futures Fall From Five-Week High as Dollar Advances

Gold futures declined from a five-week high as the dollar’s rally curbed demand for the metal as an alternative investment before Federal Reserve policy makers meet on U.S. monetary policy.

The greenback rose to a one-week high against a basket of 10 currencies as the Fed begins a two-day policy meeting. Wholesale prices unexpectedly dropped in September, curbing the appeal of gold as a hedge against inflation. Energy futures also fell today.

“A lack of fresh, bullish fundamental news is keeping buyers scarce,” Jim Wyckoff, a senior analyst at Kitco Inc., a research company in Montreal, said in a report. “The key ‘outside markets’ are also in a bearish daily posture for the precious metals -- a firmer U.S. Dollar Index and weaker crude-oil prices.”

Gold futures for December delivery fell 0.5 percent to settle at $1,345.50 an ounce at 1:36 p.m. on the Comex in New York. Yesterday, the price reached $1,361.80, the highest for a most-active contract since Sept. 20.

The Fed’s Open Market Committee meets today and tomorrow to consider whether to start trimming $85 billion a month in bond purchases. Policy makers will delay scaling back stimulus until March, according to economists surveyed last week by Bloomberg.

This year, gold has slumped 20 percent, heading for the first annual drop since 2000. Some investors lost faith in the metal as a store a value amid a U.S. equity rally to a record and tame inflation.

Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by the metal, have tumbled 35 percent this year. Last week, they dropped to the lowest since February 2009.

Silver futures for December delivery declined 0.2 percent to $22.492 an ounce on the Comex. On the New York Mercantile Exchange, platinum futures for January delivery fell 0.7 percent to $1,461.90 an ounce. Palladium futures for December delivery dropped 0.5 percent to $747.05 an ounce.

To contact the reporters on this story: Joe Richter in New York at jrichter1@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net

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

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