old dropped for the first time in seven sessions as some investors sold the metal after signs of slowing growth spurred a rally to a record $1,917.90 an ounce.
The relative-strength index of futures in New York has topped 70 since Aug. 8, a signal to some investors that prices were poised to decline. Bullion has jumped 14 percent in August amid speculation that Federal Reserve Chairman Ben S. Bernanke will signal further measures to stimulate the U.S. economy later this week and as debt crises spurred demand for haven assets.
“Gold looks very bubbly,” Matt Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “Gold’s going to continue to suck everybody in. There’s too much risk of a wicked correction lurking around the corner to enter the trade right now.”
Gold futures for December delivery fell $33.30, or 1.8 percent, to $1,858.60 at 12:58 p.m. on the Comex in New York. The metal for immediate delivery declined as much as 2.5 percent after touching a record $1,913.50 in London.
Before today, prices surged 17 percent in three weeks. The metal is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify their holdings away from equities and some currencies. Bullion also reached all-time highs in euros, British pounds and Swiss francs today.
‘Surprise’ Rally
Gold’s climb in the past several weeks “surprised most in the market, even those in the most bullish camp,” Edel Tully, an analyst at UBS AG in London, wrote in a report today. “Given the speed of the recent rally, the possibility of a correction is rising as investors look to bank profits. Even if a $150 or more pullback were to materialize, we’d strongly view it as a good buying opportunity.”
Holdings in bullion-backed exchange-traded products fell for a second day yesterday, sliding 4.7 metric tons to 2,206.4 tons, data compiled by Bloomberg show. Assets reached a record 2,216.8 tons on Aug. 8.
UBS raised its one-month gold forecast to $1,950 from $1,725 and increased its three-month outlook to $2,100 from $1,850. Yesterday, the bank’s physical sales to India, the top global buyer, were the highest since May 10, Tully said.
Bernanke is scheduled to speak Aug. 26 in Jackson Hole, Wyoming, at an annual conference sponsored by the Fed Bank of Kansas City.
“In the long-term, gold is attractive,” Zeman of Kingsview said. “Fiscal deficits are completely out of control. It’s no wonder that investors are losing faith in paper money.”
Silver futures for December delivery fell $1.135, or 2.6 percent, to $42.23 an ounce on the Comex. Before today, prices gained 40 percent this year.
Platinum futures for October delivery fell $24.20, or 1.3 percent, to $1,881.50 an ounce on the New York Mercantile Exchange after reaching $1,918.50, the highest since July 2008. Palladium futures for September delivery slid $2.05, or 0.3 percent, to $763.05 an ounce on theNymex.
Bloomberg-Nicholas Larkin and Pham-Duy Nguyen – Aug 23, 2011