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.