Gold futures fell the most in more than a week after the dollar rebounded, curbing demand for the metal as an alternative investment.
The greenback climbed as much as 0.4 percent against a basket of 10 major currencies. The dollar and gold swung between gains and losses as investors dissected testimony today from Federal Reserve Chairman Ben S. Bernanke for clues to the central bank’s plans for monetary stimulus. Earlier, the metal topped $1,300 an ounce for the first time in three weeks.
“The guessing game about the wrapping up of the stimulus continues, and that has made people nervous, and pushed them toward cash,” Adam Klopfenstein, a senior market strategist at Archer Financial Inc. in Chicago, said in a telephone interview. “Also, the gold market faced some resistance at 1,300.”
Gold futures for December delivery fell 1 percent to settle at $1,278.80 at 1:49 p.m. on the Comex, the biggest drop for a most-active contract since July 5. Earlier, the price reached $1,301.10, the highest since June 21. Trading was 36 percent above the average in the past 100 days, according to data compiled by Bloomberg.
If the economy gains more than expected and inflation accelerates “decisively” toward a 2 percent target, “the pace of asset purchases could be reduced somewhat more quickly,” Bernanke said. The Fed would also be prepared to increase the pace “for a time, to promote a return to maximum employment in a context of price stability,” he said.
Gold has tumbled 24 percent this year, erasing $60.3 billion from the value of exchange-traded products backed by the metal. Some investors lost faith in the commodity as a store of value amid an equity rally and muted inflation.
Silver futures for September delivery fell 2.6 percent to $19.42 an ounce on the Comex, the biggest drop since July 5.
On the New York Mercantile Exchange, platinum futures for October delivery dropped 1 percent to $1,411 an ounce. Palladium futures for September delivery fell less than 0.1 percent to $735.45 an ounce, ending a seven-session rally, the longest in 10 months.