By Nicholas Larkin and Halia Pavliva Nov. 12 (Bloomberg) -- Gold prices climbed to a record in New York, flirting with the longest rally in 27 years before declining as the dollar rebounded, curbing demand for the metal as an alternative asset. Gold futures fluctuated between gains and losses as the metal’s allure as a safe-harbor asset was offset by the rising dollar, which touched a 15-month low against a basket of six major currencies yesterday. A higher close for gold would cap the longest stretch of gains since August 1982. Investor Marc Faber said bullion will remain above $1,000 an ounce. “The U.S. dollar regained some strength and quelled that rally, but still the bull is on the run,” Miguel Perez- Santalla, a sales vice president at Heraeus Precious Metals Management in New York, said in a report. Precious metals including gold are being driven higher by “investment money,” and once those inflows cease, prices may head lower, he said. Gold futures for December delivery climbed as much as 0.8 percent to a record $1,123.40 an ounce on the New York Mercantile Exchange’s Comex unit. Futures traded at $1,110, down $4.60, or 0.4 percent, at 12:04 p.m. A close higher today would be the ninth straight gain for the most-active contract, matching a nine-session rally that ended on Aug. 26, 1982. Dollar Rebound The U.S. Dollar Index, the six-currency basket, advanced as much as 0.7 percent to 75.659. Before today, the index dropped 7.6 percent this year on record-low U.S. interest rates and expanded government borrowing to end the recession. Gold futures tend to rise when the U.S. currency falls. In London, gold for immediate delivery touched a record $1,123.38 an ounce before declining to trade at $1,110.35. “I’m looking for a spike in gold prices to around $1,140 an ounce in the coming hours as the dollar flirts with a support level that, if broken, opens the door and paves the way for a challenge of the all-time low in the buck,” said Ralph Preston, a Heritage West Futures Inc. analyst in San Diego. “Consensus remains very dollar-bearish,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report. “A sustained push below 75 on the dollar index could see gold rallying even higher, toward $1,150 before the end of the month.” Central-Bank Buying News last week of bullion purchases by the central bank of India and the intent to buy by the government of Sri Lanka raised speculation that other nations may add to their gold reserves. Analysts at Bank of America Merrill Lynch, Societe Generale SA and Barclays Capital have forecast such purchases. “The downside risk is difficult to quantify, but mainly comes from the lack of confirmation of strength in other metals such as silver, platinum, or copper,” said Tom Pawlicki, an MF Global Inc. metals analyst in Chicago. Copper futures fell as much as 1.2 percent in New York, while platinum and silver slid. “Gold looks to be on target to hit $1,300 before the end of the year,” said Wallace Ng, the Hong Kong-based chief trader at Fortis Bank’s commodity-derivatives unit. “It will still be the dollar in the driving seat.” “We will not see less than the $1,000 level again,” investor Faber said at a conference yesterday. The rally in futures has pushed spot gold’s 14-day relative-strength index above the level of 70 viewed by some investors as a signal for a retreat. The spot-price index climbed over 75 yesterday, according to Bloomberg data. Gold Correction “We may see the dollar rebound in the next one or two weeks,” Fortis’s Ng said. “That’s when we’ll probably see the gold correction many investors are calling for.” Silver futures for December delivery slid 22.7 cents, or 1.3 percent, to $17.31 an ounce in New York. Platinum for January delivery touched a 14-month high of $1,386 an ounce before erasing the increase to trade down $10.20, or 0.7 percent, at $1,359.40 in New York. Palladium futures for December delivery surged as much as 3.8 percent to $359 an ounce, the highest price since August 2008. The best-performing precious metal this year traded at $352, up $6.25, or 1.8 percent on the Nymex. Automakers account for about 60 percent of platinum and palladium use, according to metals researcher and refiner Johnson Matthey Plc in London. China’s passenger-car sales rose 76 percent last month. China will remain the world’s largest automobile market for “some time to come,” Nissan Motor Co. Chief Executive Officer Carlos Ghosn said today at a forum in Shanghai. “Catalytic converters, economic growth, all these sorts of good fundamental stories should help these secondary precious metals,” Jonathan Barratt, a managing director at Commodity Broking Services Pty in Sydney, said today in a Bloomberg Television interview. “As we are climbing out of this recession, it will be those metals that will be well sought after.” To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Halia Pavliva in New York at hpavliva@bloomberg.net.

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