Gold declined for a fourth day as the US dollar traded near a seven-week high versus the euro, eroding the appeal of the metal as an alternative assets.
Immediate-delivery gold fell 0.2 per cent to $US1337.10, heading for the longest slump since July. The price reached a record $US1424.60 on Nov. 9.
Platinum touched the lowest level since Sept. 28 and silver and palladium also dropped.
“We were looking for an exhaustion phase in the price,” Fat Prophets Resources Analyst David Lennox said.
“Gold had such a strong run up through to $1400, and in fairly quick time, and most of that was on the back of the weakening US dollar.”
The currency rallied to the highest level yesterday since Sept. 28, measured against a basket of six counterparts. The euro slumped amid concern a failure to craft a rescue package for Ireland will allow the nation’s banking crisis to spread.
Gold for December delivery on the Comex in New York dropped 0.2 per cent to $US1336.30 after yesterday declining to the lowest level in almost two weeks.
Silver for immediate delivery fell as much as 0.8 per cent to $US25.28 an ounce before trading at $US25.3862.
Factory production in the US increased 0.5 per cent in October, according to figures from the Federal Reserve yesterday.
Earlier this month a report showed payrolls in October gained more than forecast.
Positive surprises
“We are going to see surprises on the positive side pop up and whenever that happens we are going to see the US dollar react in a positive manner,” Lennox said.
“We probably maintain our view that the problems associated with the US dollar are not completely over yet and that we will see a return to a stronger gold price at some point.”
The euro was at $US1.3476 from $US1.3489 in New York yesterday, when it touched $US1.3448. Platinum for immediate delivery fell to $US1633.50 an ounce, the lowest level since Sept. 28, before trading down 0.5 per cent at $US1634.75.
Palladium fell as much as 1.4 per cent to $US633.75 an ounce.
The biggest increase in platinum demand for use in car pollution-control devices in 30 years will narrow the metal’s surplus this year, while excess palladium supplies will fall to a 10-year low, Johnson Matthey said in a report.
Platinum’s surplus will narrow to 290,000 ounces from 635,000 ounces last year, as gross autocatalyst demand gains 37 per cent to 3 million ounces, London-based Johnson Matthey said in a report.
Palladium supply will exceed demand by 45,000 ounces, the lowest amount since a shortage in 2000.