Gold Pares Biggest Weekly Gain Since April as Rally Spurs Sales

By Glenys Sim

Oct. 9 (Bloomberg) -- Gold dropped for the first time this week, paring its biggest weekly advance since April, after a climb to a record prompted some investors to sell the metal to lock in gains.

Bullion also fell as the dollar stemmed a decline after Federal Reserve Chairman Ben S. Bernanke said the central bank is ready to “tighten” monetary policy. Still, gold is up 4.7 percent this week, headed for its biggest weekly gain since April 24, as the Dollar Index, which tracks the greenback against the currencies of six trading partners, fell 1.2 percent.

“The likelihood that long-term U.S. dollar weakness will support gold does not obviate the fact that the near-relentless increase in bullion prices recently has raised the possibility that gold is due for a pullback,” said HSBC Securities analyst James Steel. “A U.S. dollar rally, even if only temporary, could provide a reason for gold longs to take profits,” he wrote in a report e-mailed today.

Gold for immediate delivery fell as much as 0.6 percent to $1,049.11 an ounce, and traded at $1,049.26 at 9:28 a.m. in Singapore. Bullion touched an all-time high of $1,061.55 an ounce yesterday. December-delivery gold on the Comex division of the New York Mercantile Exchange declined 0.6 percent to $1,050.40 an ounce.

Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, were unchanged at 1,109.31 metric tons yesterday, data on the company’s Web site showed. The trust’s holdings are 2.2 percent from the record 1,134.03 tons reached June 2.

Among other precious metals for immediate delivery, silver slid 0.6 percent to $17.68 an ounce, platinum lost 0.6 percent to $1,339.25 an ounce, and palladium dropped 0.9 percent to $317.75 an ounce as of 9:20 a.m. in Singapore.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net