Gold Prices Fall, Retreating From $1,000

Sept. 9 (Bloomberg) -- Gold fell from more than $1,000 an ounce as some investors sold the metal after the price climbed to an 18-month high yesterday. Silver also slipped.

Bullion futures reached $1,009.70 an ounce yesterday, the most since March 2008, as the dollar dropped 0.9 percent against a basket of six major currencies. Today, the dollar sank as much as 0.8 percent against the euro, falling to a 2009 low, and gold futures touched $1,005 before erasing gains. Gold tends to rise when the U.S. currency weakens.

“An expected period of profit-taking pushed gold back from its high,” Mark O’Byrne, a director at broker GoldCore Ltd. in Dublin, said in a note. “A very good indicator of gold’s sustainability has been visible today as it has constantly tested the $1,000 an ounce level. Investors are buying because they are worried regarding property and stock markets.”

Gold futures for December delivery fell $2.70, or 0.3 percent, to $997.10 an ounce on the New York Mercantile Exchange’s Comex division. The metal reached a record $1,033.90 on March 17, 2008.

“It seems inevitable that the near-infinite supply of paper and electronic money will fall in value versus the finite currency that is gold,” O’Byrne said in the note. “Increasing concerns regarding the sustainability of the global recovery and about the outlook for inflation should see gold continue to rise.”

Spot Price Eases

In London, bullion for immediate delivery slipped $1.63, or 0.2 percent, to $993.78 an ounce at 6:56 p.m. local time. London spot prices reached an all-time high of $1,032.70 an ounce on March 17, 2008.

Gold may resume its September rally, which boosted the price 4.9 percent through yesterday, should the dollar continue to decline, analysts said. Before today, the dollar sank 1.1 percent this month against the six-currency basket.

“The dollar remains the key factor determining gold’s direction,” Pradeep Unni, a Richcomm Global Services analyst in Dubai, said in a report. “If the dollar continues to be pressured by investors selling it to buy riskier assets, bullion could extend gains. If gold can keep above $1,000 this week, it may pave the way for a test of the record.”

The dollar may “rebound on any positive economic news,” Miguel Perez-Santalla, a Heraeus Precious Metals Management sales vice president in New York, said in a note.
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