Gold declined for a second day, after reaching a record last week, as a strengthening US dollar eased demand for the metal as an alternative investment.
Bullion for immediate delivery dropped 0.6 per cent to $US1360.75 an ounce. The metal reached a record $US1387.35 on Oct. 14 as the greenback fell on speculation the Federal Reserve will take more stimulus measures amid low inflation and an unemployment rate near 10 per cent.
“For the time being we are just waiting for more significant data and further rhetoric from the Fed,” Darren Heathcote, head of trading at Investec Bank (Australia), said. “Gold is off the peak, but you are bound to get some profit-taking,” he said.
Builders in the US probably started fewer homes in September, while production rose for a seventh month, evidence of uneven growth, economists said before reports this week. Fed Chairman Ben Bernanke said Oct. 15 that that the bank may expand asset purchases, while saying “nonconventional policies” have costs and limitations.
Gold for December delivery on the Comex in New York fell 0.8 per cent to $US1361 an ounce. Futures have advanced 24 per cent this year and reached a record $US1388.10 an ounce on Oct. 14.
The dollar rose 0.2 per cent against a basket of six currencies, gaining for a second day. The greenback traded at $US1.3924 per euro from $US1.3977 on Oct. 15, when it earlier reached the weakest level since January. Bullion typically moves in the opposite direction to the US currency.
Gains forecast
Still, bullion may gain this week as investors seek an alternative to currencies, a Bloomberg survey last week found. Fifteen of 19 traders, investors and analysts surveyed, or 79 per cent, said the metal will gain, three forecast lower prices and one was neutral.
Silver fell 2.1 per cent to $US23.8237 an ounce after reaching $US24.92 on Oct. 14, the highest level for 30 years.
The metal may trade between $US20.50 and $US25.50 for the remainder of the year, Philip Klapwijk chairman of London-based research company GFMS Ltd, said Oct. 16.
“Our view is silver is likely nearing a top now, and that it has more downside in the short-term than upside, he said. ‘‘But we remain bullish in the long term.’’
Platinum fell 0.8 per cent to $US1682 an ounce, while palladium declined 1.4 per cent to $US581.75 an ounce after reaching a nine-year high of $US605.13 last week.
US housing starts data will be released by the Commerce Department tomorrow. A Federal Reserve report is forecast to show output at the nation’s factories, mines and utilities increased 0.2 per cent for a second month, according to economists surveyed by Bloomberg.