March 6 (Bloomberg) -- Gold futures fell on sales by some investors following the precious metal's surge to a record yesterday. Silver also declined.
Gold yesterday reached $995.20 an ounce, the highest ever, as record energy costs and a plunge in the dollar sparked demand for the metal as an inflation hedge. Gold has climbed for seven straight years, jumping 31 percent in 2007 as consumer costs accelerated the most since 1990.
"This is position-shifting to take advantage of the recent run-up to record levels," said Ron Goodis, a futures trading director at Equidex Brokerage Group Inc. "It's possible that gold has reached some resistance."
Gold futures for April delivery dropped $11.40, or 1.2 percent, to $977.10 an ounce on the Comex division of the New York Mercantile Exchange. The price earlier touched $966.50.
Silver futures for May delivery tumbled 56 cents, or 2.7 percent, to $20.225 an ounce.
Gold has gained 17 percent this year, while silver jumped 36 percent.
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Gold may be too high for some buyers, analysts said. Imports by India, the world's biggest purchaser, plunged 81 percent to 10.2 metric tons in February from a year earlier, the Bombay Bullion Association Ltd. said.
"The buying from India is really a cautionary signal," said Tom Winmill, managing director of Midas Management Corp. in New York. "The question is whether the investment demand can pick up the slack."
StreetTracks
Investment in the StreetTracks Gold Trust, the biggest exchange-traded fund backed by bullion, has remained at 648 metric tons since March 3. The record was 653 metric tons on Jan. 14.
Still, a decline in the price may spur renewed demand for a hedge against inflation. Crude-oil futures reached a record $105.97 a barrel today, and the euro touched $1.5378, the highest ever.
"It's crude and the dollar," said Frank McGhee, the head metals trader at Integrated Brokerage Services LLC in Chicago. "Gold is riding the stagflation wave."
To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net. |
Prospectus
