Gold Falls as Record Price Spurs Investor Sales; Silver Rallies

Gold futures fell as investors stepped up sales following a six-session rally to a record. Silver extended an advance to a 30-year high.

Earlier, gold reached an all-time high of $1,432.50 an ounce as the dollar fell to a three-week low against the yen and weakened against most other major counterparts after President Barack Obama agreed to extend tax cuts. The metal priced in euros also reached a record.

“You have some very willing sellers,” said Matthew Zeman, a metals trader at LaSalle Futures Group in Chicago. “We are coming to the end of the year, and with gold making another high, it’s a good time to take profit.”

Gold futures for delivery in February fell $7.10, or 0.5 percent, to settle at $1,409 an ounce on the Comex in New York, the first decline since Nov. 26. Gold for immediately delivery reached a record $1,431.25.

On the Comex, gold has jumped 29 percent this year, heading for the 10th straight annual gain, after governments spent trillions of dollars and kept borrowing costs low to bolster economies hurt by the most-severe global recession since World War II.

“We have no real growth and no interest-rate hikes coming along,” said Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago. “The longer-term view is that governments will continue to provide liquidity to the markets and debase their currencies. This sets up gold for much higher prices.”

‘Inflationary Event’

The Thomson Reuters/Jefferies CRB Index of 19 raw materials fell for the first time in a week after reaching the highest in almost 26 months. Assets of gold in exchange-traded products rose 0.75 metric ton to 2,099.15 tons yesterday, according to data compiled by Bloomberg from 10 providers.

“With the Fed providing cheap money and tax cuts spurring people to spend money, the gold market is looking at this as an inflationary event,” said Adam Klopfenstein, a senior strategist at Lind-Waldock in Chicago.

Silver futures for March delivery rose 4.2 cents, or 0.1 percent, to $29.777 an ounce on the Comex. Earlier, the price reached $30.75, the highest for a most-active contract since March 1980. The metal has gained 77 percent this year.

Palladium futures for March delivery slipped $12.70, or 1.7 percent, to $738.70 an ounce on the New York Mercantile Exchange. The price has jumped 81 percent this year.

Platinum futures for January delivery fell $8.40, or 0.5 percent, to $1,705.20 an ounce. The metal has gained 16 percent this year.

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