Gold futures fell the most in more than seven weeks as the dollar rose amid concern that the crisis in Spain is worsening, crimping demand for the metal as an alternative investment.
The dollar gained for the third straight day against a basket of six major currencies as Germany, the Netherlands and Finland said Spain should bear the cost of problems in their banks, with the European Stability Mechanism assuming only a limited burden in recapitalizations. Through yesterday, gold climbed 10 percent this quarter, partly on speculation that Europe’s leaders would be able to stem the region’s fiscal woes.
“Global anxieties surrounding Europe are flaring up, and we are seeing a flight to cash,” Adam Klopfenstein, a senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “People are in a risk-off mode today.”
Gold futures for December delivery retreated 1.1 percent to $1,746.90 an ounce at 9:55 a.m. on the Comex in New York, heading for the largest drop since Aug. 2. The price is up 11 percent this year.
The Standard & Poor’s GSCI Spot Index of 24 raw materials fell as much as 1.3 percent to 650.02, the lowest since Aug. 7.
Silver futures for December delivery fell 1.1 percent to $33.57 an ounce in New York. Prices are heading for the fourth consecutive decline, which would be the longest slump since May 16. The metal is up 21 percent this quarter.