Gold, Silver Fall as Dollar Rally Erodes Appeal of Commodities

Aug. 26 (Bloomberg) -- Gold and silver futures fell as the dollar’s rebound reduced the appeal of commodities as alternative investments.

The dollar climbed as much as 0.6 percent against the euro after the Xinhua News Agency reported that China is studying curbs on industrial overcapacity, increasing concern the global recovery will slow. The Reuters/Jefferies CRB Index of 19 raw materials fell as much as 0.8 percent, and crude oil dropped.

“If the dollar continues to strengthen and oil falls, gold could correct toward $930 an ounce,” said Sagiv Peretz, a senior dealer at Finotec Trading U.K. in London.

Gold futures for December delivery slid 20 cents to $945.80 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, the price dropped as much as 0.5 percent.

Bullion for immediate delivery rose $1.18 to $945.93 at 3:27 p.m. New York time.

U.S. government figures showed today that purchases of new homes jumped more than forecast in July and demand for long- lasting goods such as autos and computers climbed, reinforcing signs the economy is rebounding.

A “stronger dollar following home-sales data and durable- goods orders” pushed gold lower, Jon Nadler, a senior analyst at Kitco Inc. in Montreal, said in an e-mail. The metal may fall to $935, he said.

Yesterday, holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by the metal, fell 4.58 metric tons to 1,061.83 tons, the lowest level since March 13.

Silver futures for December delivery fell 5.8 cents, or 0.4 percent, to $14.288 an ounce on the Comex.

Gold has climbed 7 percent this year, while silver is up 27 percent.