Oct. 17 (Bloomberg) -- Gold futures fell from a three-week high as the dollar’s rally reduced demand for the precious metal as an alternative asset. Silver also dropped.
The greenback climbed as much as 0.8 percent against a basket of six major currencies as Germany damped expectations for a fast resolution to Europe’s debt crisis. The dollar jumped 6 percent last month, while gold slumped 11 percent.
“The dollar’s strength is weighing on gold,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “Also, some people are waiting on the sidelines because of the volatility in prices.”
Gold futures for December delivery declined 0.4 percent to settle at $1,676.60 an ounce at 1:41 p.m. on the Comex in New York. Earlier, the price reached $1,696.80, the highest for a most-active contract since Sept. 23. Last week, the metal gained 2.9 percent, the most in more than a month.
On Sept. 6, gold reached a record $1,923.70 as investors sought to diversify away from equities and some currencies. The metal has advanced 22 percent in the past 12 months.
“While there is no rush to buy gold here, it is equally clear that investors who are long the yellow metal are not willing to let go of holdings either,” Edel Tully, a London- based analyst at UBS AG, said in a report.
Silver futures for December delivery declined 1.1 percent to $31.821 an ounce. The metal has gained 31 percent in the past 12 months.
On the New York Mercantile Exchange, platinum futures for January delivery fell 0.2 percent to $1,551.80 an ounce. Palladium futures for December delivery slid 0.6 percent to $616.80 an ounce.
--With assistance from Glenys Sim in Singapore and Nicholas Larkin in London. Editors: Patrick McKiernan, Millie Munshi
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