Gold Falls, Halting Longest Rally in Six Months; Silver Drops

Gold futures fell for the first time in two weeks on sales by investors following the longest rally since August. Silver dropped for the second straight day.

Political turmoil in parts of the Middle East and North Africa drove gold higher in the previous eight sessions. The metal’s 14-day relative-strength index topped 70 in the past two days, a signal that prices were poised to fall. The metal has climbed 5.6 percent this month after tumbling 6.1 percent in January.

“Gold had a corrective move, but new buying will come in because the geopolitical instability is far from over,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC inChicago.

Gold futures for April delivery fell $6.50, or 0.5 percent, to settle at $1,409.30 an ounce at 1:43 p.m. on the Comex in New York. This week, the metal advanced 1.5 percent, the fifth straight gain.

Yesterday, the price reached $1,418.80, the highest since Jan. 3. On Dec. 7, the metal surged to a record $1,432.50.

“Gold may still have the potential to advance toward the Dec. 7 high with support coming from growth in investment, geopolitical factors and inflation threats,” Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago, said in a report.

Silver futures for May delivery dropped 25.7 cents, or 0.8 percent, to $32.923 an ounce. Yesterday, the price declined 0.4 percent. The metal gained 1.9 percent this week.

On Feb. 22, silver reached $34.315, the highest since March 1980. The commodity has doubled in the past 12 months.

Palladium futures for June delivery rose $7.90, or 1 percent, to $787.60 an ounce on the New York Mercantile Exchange. This week, the price fell 8.2 percent, the most since early July.

Platinum futures for April delivery gained $16.60, or 0.9 percent, to $1,803.40 an ounce. The metal fell 2.2 percent this week.

(Source: http://www.bloomberg.com/news/2011-02-25/gold-futures-decline-halting-longest-rally-in-six-months-silver-slides.html)