Gold falls below US$1,000 as dollar rebound cuts demand

The IMF's executive board on Sept. 18 approved sales of 403.3 metric tons valued at about US$13 billion, pledging to avoid disrupting the market and saying it would “stand ready to sell gold directly to central banks.” The U.S. Dollar Index gained for a second day on speculation U.S. policy makers will this week signal they may withdraw economic stimulus measures.

“There is a little bit of stabilization in the dollar,” Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said by phone. While “the IMF news is also negative for gold,” he said, “it's not a new discussion and should not prevent gold rising to new highs.”

Immediate-delivery bullion lost as much as US$11.63, or 1.2 percent, to US$995.97 an ounce and traded at US$1,000.38 by 11:50 a.m. local time. The metal, which fell below US$1,000 for the first time since Sept. 15, added 0.2 percent last week, a fifth gain. December gold futures were 0.9 percent lower at US$1,001.50 on the New York Mercantile Exchange's Comex division.

The metal slipped to US$999.25 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from US$1,012 at the afternoon fixing on Sept. 18.

The IMF's sale approval poses no “material threat to current prices,” Peter Richardson, Morgan Stanley's chief metals economist in Melbourne, said Monday in a report. The bank kept its 2010 gold forecast at US$1,000 an ounce.

Gold has climbed 13 percent in London this year, while the dollar index, a six-currency gauge of the greenback's strength, has slid 5.4 percent. The measure slipped as much as 0.7 percent Monday.

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