Gold Drops Below $700 as Investors Flee to Cash; Silver Falls

By Pham-Duy Nguyen

Oct. 23 (Bloomberg) -- Gold fell below $700 an ounce as a rising dollar and stock-market losses forced investors to sell the metal to raise cash. Silver also dropped.

Before today, gold slid 12 percent this year as the dollar gained 11 percent against a weighted basket of six major currencies and the Dow Jones Industrial Average lost 36 percent. The metal reached a record in March. Gold hasn't traded below $700 in more than a year.

``The name of the game is to raise dollars,'' said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. ``People will sell their winners to fund their losers. The best performer since the financial crisis began has been gold.''

Gold futures for December delivery fell $24.80, or 3.4 percent, to $710.40 an ounce at 9:27 a.m. on the Comex division of the New York Mercantile Exchange. Earlier, the price touched $695.20, the lowest since Sept. 6, 2007, the last time the metal traded for less than $700.

Silver futures for December delivery fell 12.5 cents, or 1.3 percent, to $9.335 an ounce. Before today, the price dropped 37 percent this year.

The dollar has risen 4.1 percent this week against the basket of currencies.

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