October 28, 2009
Gold fell for a fourth straight session, the longest slide since August, amid concern that the dollar will extend a rally, curbing demand for the precious metal as an alternative asset.
The US dollar rose against a basket of six major currencies, adding to three consecutive advances since October 21, when it touched a 14-month low. Gold, which often moves inversely to the greenback, has dropped 2.7 per cent in the past four sessions.
"Gold doesn't have that much buying interest," said Matt Zeman, a LaSalle Futures Group Inc. metals trader in Chicago. "The dollar could undergo a wicked short-covering rally, and the gold market needs to look out below."
Gold futures for December delivery fell $US7.40, or 0.7 per cent, to $US1035.40 an ounce on the Comex division of the New York Mercantile Exchange. The slump was the longest since August 10. The metal has climbed 17 per cent this year, reaching a record $US1072 on October 14.
A rise in bets on a drop in futures is a "signal that an increasing proportion of market players view the current gold price as unsustainable," Eugen Weinberg, a Commerzbank AG analyst in Frankfurt, said yesterday in a report. "Should this sentiment spread further, gold could come under considerable pressure."
Hedge funds and other large speculators trimmed their net- long position in gold futures by 2 per cent as of October 20, from a record in the previous week, and miners, producers and commercial users increased their net-short position, Commodity Futures Trading Commission data show. A net-long position benefits when prices rise, while net-shorts gain from a decline.