Gold Price May Decline as Rally Prompts Some Investors to Sell

Oct. 20 (Bloomberg) -- Gold, little changed in Asia, may decline on speculation that the precious metal’s recent rally to a record is prompting some investors to sell their positions.

“While many speculators had rushed to jump onto the bandwagon, an expanding minority of short-term oriented investors is betting on falling gold prices,” Eugen Weinberg, a senior analyst with Commerzbank AG, wrote in a note.

Hedge funds and other large speculators hold their most- bullish position ever in futures, helping to propel gold’s gains for the year to about 21 percent as a weaker dollar and rising government debt spurred concern that inflation may accelerate. Spot gold touched an all-time high of $1,070.80 on Oct. 14.

Gold for immediate delivery was at $1,063.63 an ounce at 8:40 a.m. in Singapore, after trading between a loss of 0.2 percent and a gain of 0.1 percent. The Dollar Index, down 7.5 percent this year, was little changed at 75.217.

So-called net-long positions, or bets prices will rise, increased 6 percent to 253,955 contracts in the week ended Oct. 13, according to data from the Commodity Futures Trading Commission.

To be sure, gold will average $1,200 an ounce in the third quarter of next year, Standard Chartered Bank forecast yesterday. UBS AG lifted its 1-month estimate to $1,000 an ounce, from $950, and its 3-month forecast for the metal to $1,050, from $1,000.

“Physical demand for gold from jewelry clients, although generally light over the past six weeks, has been seen in good strength on corrections in the price,” John Reade, an analyst with UBS AG, said in a report.

Among other precious metals, silver was little changed at $17.83 an ounce, platinum rose 0.3 percent to $1,361.75 an ounce and palladium weakened 0.1 percent to $333.25 an ounce.