Gold Falls From Near Record as the Dollar Gains; Silver Declines

Gold declined in New York, after nearing a record, as a stronger dollar curbed demand for the precious metal as an alternative asset. Silver fell from a 30-year high.

After touching records the previous two sessions, gold traded 20 cents below the high set Nov. 5 before retreating. The euro slid against the dollar on concern that Ireland will struggle to plug its budget deficit. Before today, gold gained 28 percent this year, touching a record $1,398.70 an ounce last week, as the dollar fell to a nine-month low versus the euro.

“The dollar moved stronger, which influenced the gold price to trade lower,” said Bayram Dincer, an analyst at LGT Capital Management in Switzerland. “Gold trades at elevated levels. We expect the next direction to be toward lower prices, as profit-taking may be necessary.”

Gold futures for December delivery fell $8.70, or 0.6 percent, to $1,389 at 10:03 a.m. on the Comex in New York. Gold for immediate delivery in London fell $3.47, or 0.2 percent, to $1,390.18, after earlier reaching a record $1,398.60.

Currency Debasement

Gold is heading for a 10th annual gain, the longest winning streak since at least 1920 in London, partly on demand for an alternative asset to protect against the debasement of currencies. Precious metals have outperformed global equities, Treasuries and most industrial metals this year as central banks maintained low interest rates and governments spent trillions of dollars to spur growth.

Over the long term, “investment flows may move toward the dollar and stocks, and squeeze gold out of the equation,” said Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago.

Silver for December delivery fell 4.3 cents, or 0.2 percent, to $26.705 an ounce on the Comex, after gaining 1 percent to $27.015, the highest level since March 1980. Prices are up 59 percent this year. The metal reached an all-time high of $50.35 in New York in 1980, a year after the Hunt brothers tried to corner the market.

‘Overextended’ Silver

“There is an air of euphoria around silver, as it seems to be unable to put a foot wrong,” Standard Bank Plc said in a report dated Nov. 5. “The market is overextended, however, and we must caution that there is the possibility of a sharp correction, at least toward $23. In its current mood, though, any such dip would be likely to find buyers.”

Silver futures’ 14-day relative strength index, a gauge of whether a commodity is overbought or oversold, is at 76.7. Some analysts and traders who study technical charts view readings above 70 as signaling a potential impending drop.

Palladium futures for December delivery rose $13.10, or 1.9 percent, to $698.50 an ounce on the New York Mercantile Exchange. Earlier, the price reached $700.50, the highest level since April 2001. It’s up 69 percent this year.

Platinum for January delivery fell $10.60, or 0.6 percent, to $1,758.30 an ounce in New York.

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