Gold may fall as rebound in the dollar erodes demand

The dollar gained as much as 0.4 percent against the euro. Bullion typically moves inversely to the dollar and rose to a record US$1,152.85 an ounce on Nov. 18. The metal is up 2.1 percent this week, heading for a third weekly gain.

“We could see more downside in gold with further gains in the dollar,” Andrey Kryuchenkov, a VTB Capital analyst in London, said in a report.

Gold for immediate delivery fell US$3.60, or 0.3 percent, to US$1,141 an ounce by 11:23 a.m. local time. Gold futures for December delivery on the New York Mercantile Exchange's Comex division were little changed at US$1,141.10 an ounce.

The metal increased to US$1,142.50 in the morning “fixing” in London, used by some mining companies to sell production, from US$1,135.50 at Thursday's afternoon fixing. Spot prices have climbed 30 percent this year as the dollar lost 5.6 percent against the euro.

The metal may extend gains next week, according to nineteen of 26 traders, investors and analysts surveyed by Bloomberg. Five forecast lower prices and two were neutral.

Among other precious metals for immediate delivery in London, silver slipped 1.1 percent to US$18.34 an ounce. Platinum fell 1 percent to US$1,429.95 an ounce, and palladium was 2.9 percent lower at US$357.75 an ounce.

Platinum held in ETF Securities Ltd.'s exchange-traded products rose 0.6 percent to a record 424,986 ounces Thursday, according to the company's Web site.

“The fragility of the U.S. dollar remains a key driver of the gold price,” David Moore, a commodity strategist at Commonwealth Bank of Australia, said in a report.

The rally has pushed spot gold's 14-day relative strength index, a gauge of whether a commodity or security is overbought or oversold, above the level of 70 viewed by some investors and analysts who follow technical charts as signaling a decline. Friday's reading for spot prices was 73.63.

“The pace of gold's spectacular rally over the past three weeks is unsustainable,” Elizabeth Gregory, a markets strategist in Geneva at ACM Advanced Currency Markets, said in a note. “There will need to be a period of consolidation before any move higher. It would not be surprising to see prices dip as low as US$1,100 before continuing the rally higher to US$1,200 levels.”

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