Gold Drops, Ending Four-Day Gain as Investors Sell Near $1,000

By Kim Kyoungwha

Sept. 7 (Bloomberg) -- Gold fell, snapping a four-day advance, as some investors sold holdings after bullion surged close to the highest this year.

Bullion jumped 4.1 percent last week, the steepest weekly gain since April, as the Dollar Index declined, reversing a 0.4 percent advance the previous week.

“There is growing interest in profit-taking after gold neared the $1,000 level,” said Jang Joong Shik, head of precious metals trading with Hyundai Futures Co. in Seoul. “The dollar will keep a weak tone which, combined with inflationary concerns, will power a further rise in the metal.”

Gold for immediate delivery fell 0.2 percent to $992.55 an ounce at 9:19 a.m. in Singapore. The metal has advanced 13 percent this year.

Hedge-fund managers and other large speculators increased their net-long position in New York gold futures in the week ended Sep. 1, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 184,501 contracts on the Comex division of the New York Mercantile Exchange, the Washington- based commission said in its Commitments of Traders report.

“The price increase is of speculative nature, but gold will be able to temporarily break through the $1,000 mark,” Eugen Weinberg, a senior analyst with Commerzbank AG, wrote in a Sept. 4 note. “Currently, there is insufficient fundamental support to allow for a sustained rise beyond this level.”

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell 0.38 metric tons to 1,077.63 tons on Sept. 4, according to data on the company’s Web site.

Among other precious metals for immediate delivery, silver was little changed at $16.22 an ounce, platinum rose 0.4 percent to $1,259.50 an ounce and palladium was unchanged at $292.50 an ounce.

To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net