Gold Falls on Investor Sales After Rally to Record; Silver Approaches $42

Gold futures fell on sales by investors after a rally to a record of $1,478 an ounce. Silver climbed close to $42 an ounce, extending a surge to a 31-year high.

Libyan leader Muammar Qaddafi agreed to accept an African Union peace plan that may lead to a cease-fire with rebels, eroding demand for gold as an investment haven. Silver gained for the sixth straight session, the longest rally in four months.

“People are quick to take profit when gold reaches a record,” said Matthew Zeman, a strategist at Kingsview Financial in Chicago. “The silver market is the one everyone is in love with and afraid of missing the boat. People fully expect silver to get to $50.”

Gold futures for June delivery fell $6, or 0.4 percent, to settle at $1,468.10 at 1:45 p.m. on the Comex in New York. The price has climbed 26 percent in the past 12 months.

Silver futures for May delivery advanced 0.4 cent to $40.612. Earlier, the metal reached $41.975, the highest since January 1980. The price has more than doubled in the past year. The record in 1980 was $50.35.

Unrest in the Middle East and northern Africa this year drove crude oil to a 30-month high and boosted demand for precious metals as a hedge against inflation. Oil futures in New York dropped as much as 2.9 percent after the International Monetary Fund cut growth estimates for the U.S. and Japan.

“Anything that takes away the risk premium is going to weigh on gold,” Zeman said.

Palladium futures for June delivery fell $5.95, or 0.7 percent, to $788.25 an ounce on the New York Mercantile Exchange. The metal has gained 53 percent in the past 12 months.

Platinum futures for July delivery dropped $19.30, or 1.1 percent, to $1,792.80, the biggest drop in almost four weeks. The price has climbed 3.8 percent in the past year.

(Source: http://www.bloomberg.com/news/2011-04-11/gold-falls-on-investor-sales-after-rally-to-record-silver-gains.html)