Gold Retreats as Stronger Dollar, Rally to Record Prompt Sales

Gold Retreats as Stronger Dollar, Rally to Record Prompt Sales
March 10 (Bloomberg) -- Gold fell the most in a week as a stronger dollar prompted some investors to sell the metal after unrest in the Middle East and northern Africa pushed prices to a record.

The dollar rose against a basket of six major currencies and oil fell for a third straight day. Gold futures reached an all-time high of $1,445.70 an ounce on March 7 as violence in Libya escalated.

“The weakness in crude oil and the stronger dollar are pushing gold lower,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “Gold went up and made new highs this week, but there was no follow-through, so traders are liquidating their positions because the trade is not working.”

Gold futures for April delivery declined $17.10, or 1.2 percent, to settle at $1,412.50 at 1:51 p.m. on the Comex in New York, the biggest drop since March 3. The metal has climbed 27 percent in the past year.

“There are short-term traders and investors who want to reap profits after the rally,” said Chae Un Soo, a Seoul-based trader with KEB Futures Co. “Losses will be limited as there’s an enormous interest in gold and precious metals.”

Muammar Qaddafi’s forces resumed air strikes on oil hubs in the central area of Libya’s coastline that mark the east-west dividing line in the nation’s civil war. More than 400 people have been killed and 2,000 wounded in the clash since Feb. 17, a member of the insurgents’ provisional health committee told reporters yesterday in Benghazi.

Gold fell as much as 1.9 percent before paring losses after the Associated Press reported that police in Saudi Arabia opened fire at a rally after the government warned it won’t tolerate protests.

‘Day of Rage’

Postings on websites have called for a nationwide “Day of Rage” in Saudi Arabia on March 11. The country is the world’s biggest oil exporter.

“The real fear is that any of the Middle East upheaval will spread to Saudi Arabia,” Lesh of FuturePath said.

Silver futures for May delivery fell 98.1 cents, or 2.7 percent, to $35.066 an ounce on the Comex. The price climbed to $36.745 on March 7, the highest since March 1980. That year, the metal reached a record $50.35.

Palladium futures for June delivery slid $15.25, or 2 percent, to $766.40 an ounce on the New York Mercantile Exchange. Platinum futures for April delivery dropped $36.40, or 2 percent, to $1,765.60 an ounce.

--With assistance from Kyoungwha Kim in Singapore and Nicholas Larkin in London. Editors: Millie Munshi, Steve Stroth

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at

To contact the editor responsible for this story: Steve Stroth at