Gold, Precious Metals Fall as Investors Sell to Cover Losses

By Pham-Duy Nguyen

Sept. 16 (Bloomberg) -- Gold, silver and other precious metals fell as investors sold commodities to raise cash and cover losses in other markets.

Equities in Asia, Europe and the U.S. retreated on speculation American International Group Inc. would be the next victim of the credit crisis. The cost of borrowing dollars doubled overnight in London as banks hoarded cash after Lehman Brothers Holdings Inc. filed for bankruptcy protection and AIG's debt ratings were downgraded. Gold rose 5.6 percent in the previous two sessions as investors sought a haven from market turmoil.

``It's all related to money flow at this point,'' said William O'Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. ``Some of this is the need to acquire capital related to margin calls. Gold has a very special quality to it as a monetary asset that silver and platinum lack and that's why it's holding up much better than other commodities.''

Gold futures for December delivery fell $9.20, or 1.2 percent, to $777.80 an ounce at 9:24 a.m. on the Comex division of the New York Mercantile Exchange. The metal reached a record $1,033.90 on March 17.

Silver futures for December delivery dropped 55 cents, or 4.9 percent, to $10.585 an ounce on the Comex. Platinum futures for October delivery plummeted $99.20, or 8.4 percent, to $1,077 an ounce. Palladium futures for December delivery lost $14.05, or 5.9 percent, to $223.95 an ounce in New York.

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.