Gold Drops Most in a Week as Stronger Dollar Damps Metal Demand

NEW YORK (Oct 9) Gold fell the most in a week after the dollar extended gains and as imports slumped in India, the world’s biggest consumer.

The Bloomberg U.S. Dollar Index, a gauge against 10 major trading partners, rose to a one-week high, curbing demand for the precious metal as an alternative asset. Purchases of gold and silver by India were worth $800 million in September compared with $4.6 billion a year earlier, the Commerce Ministry said today.

The dollar is the winner today,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “Prices are under pressure as physical demand has taken a hit.”

Gold futures for December delivery tumbled 2.1 percent to $1,296.70 an ounce at 10:10 a.m. on the Comex in New York, heading for the biggest drop since Oct. 1.

The Federal Reserve is scheduled today to release minutes of last month’s meeting, when policy makers unexpectedly refrained from reducing monetary stimulus. Bullion slumped 21 percent this year through yesterday on concern that the central bank will taper its $85 billion of monthly bond purchases as the economy improves.

Janet Yellen, the Fed vice chairman and an architect of its stimulus program, will be nominated to succeed Ben S. Bernanke, a White House official said in an e-mailed statement.

The U.S. government shutdown has halted the release of economic reports, including payrolls data on Oct. 4, as lawmakers remained deadlocked over a budget impasse and a plan to raise the country’s debt limit.

Silver futures for December delivery fell 2.9 percent to $21.79 an ounce on the Comex, heading for the biggest decline since Sept. 20.