Gold prices fell for a second day in New York as a rebound in the dollar curbed demand from investors who buy the precious metal as a hedge against inflation.
The US currency gained as much as 0.3 per cent against the euro after a report showed sales of existing US homes climbed. The greenback earlier fell to a 14-month low, while gold futures traded near the record of $US1072 an ounce reached on October 14.
"The biggest threat for gold is if the dollar makes a significant move higher," said Gijsbert Groenewegen, a partner at Gold Arrow Capital Management, a New York-based hedge fund. "It could have a significant impact on prices."
Gold futures for December delivery dropped $US2.20, or 0.2 per cent, to $US1056.40 an ounce on the Comex division of the New York Mercantile Exchange. The price fell 0.6 per cent yesterday.
Earlier, futures gained as much as 1 per cent to $US1068.80 as concerns that inflation will accelerate spurred demand for gold as an alternative asset. The price rose 0.5 per cent this week, the fourth straight advance, and has climbed 19 per cent this year.
Gains in profit at companies including Amazon.com Inc and Kia Motors Corp boosted equity markets in early trading, fueling speculation that the economic recovery will trigger higher consumer costs. Record government debt and US interest rates close to zero percent helped pushed gold futures to the highest ever.
The Dow Jones Industrial
Average and the Standard & Poor’s 500 Index fell later, heading for their
biggest declines since October 1.
