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Gold Trades Near Four-Month Low as Iran Deal Damps Demand

Nov. 25 (Bloomberg) -- Gold futures traded near the lowest in more than four months as the accord between Iran and world powers damped demand for haven assets.

Iran agreed yesterday to curtail nuclear activities in return for easing of some sanctions on oil, auto parts, gold and precious metals, an accord that broke a decade-long deadlock. Gold pared losses before the expiry of December options today, according to Sterling Smith, a futures specialist at Citigroup Inc. in Chicago.

“Investors have added to their short positions as the demand for the safe heaven faded,” Naeem Aslam, the chief market analyst at Ava Capital Markets Ltd. in Dublin, said by e-mail. “This was not good news for gold.”

Gold futures for February delivery slid 0.2 percent to settle at $1,241.60 an ounce at 1:37 p.m. on the Comex in New York. Prices earlier fell as much as 1.5 percent to $1,226.40, the lowest since July 8. Trading was 52 percent above the average for the past 100 days at this time, data compiled by Bloomberg showed.

As of Nov. 22, investors held 10,658 contracts giving the right to sell at $1,000, the most-active December put-option.

Hedge funds cut their net-long position in gold to a four-month low in the week ended Nov. 19, U.S. Commodity Futures Trading Commission data show. Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, have shrank 37 percent this year to the lowest since January 2009.

Gold has tumbled 26 percent in 2013 after a 12-year rally. Investors sold metal from ETFs at a record pace on expectations that the Federal Reserve will start to cut its $85 billion in monthly bond buying and as inflation fails to pick up.

Silver futures for March delivery gained 0.1 percent to $19.926 an ounce on the Comex, after falling to $19.62, the lowest since Aug. 8.

On the New York Mercantile Exchange, platinum futures for January delivery fell 0.4 percent to $1,377.80 an ounce, while palladium futures for March delivery gained 0.8 percent to $722.15 an ounce.

To contact the reporters on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net; Joe Richter in New York at jrichter1@bloomberg.net

To contact the editor responsible for this story: Millie Munshi at mmunshi@bloomberg.net

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