Gold fell for the first time in five days in London as a stronger dollar prompted some investors to sell after the metal’s rally to a record. Gold futures were little changed after earlier rising for a ninth day, the longest run since 1982. The Dollar Index added as much as 0.4pc after yesterday slipping to a 15-month low. Bullion is still heading for a second weekly gain after India’s central bank bought gold last month to diversify reserves. Futures reached a record today and investor Marc Faber said bullion, set for a ninth annual increase, will remain above $1,000 an ounce. “The dollar is gaining some strength,” Sagiv Perez, a senior dealer at Finotec Trading UK in London, said by phone today. “There’s a little bit of profit-taking because the highs in gold at the moment are quite substantial.” December gold futures climbed as much as 0.8pc to $1,123.40 an ounce on the New York Mercantile Exchange’s Comex division, and were down 0.1pc at $1,113.30 by 8:46am in New York. Immediate-delivery bullion dropped 0.4pc to $1,113.30 an ounce in London after earlier reaching $1,123.38. Platinum and palladium rose to the highest prices in more than a year. Gold increased to a record $1,116 an ounce in the morning “fixing” in London from $1,115.25 at yesterday’s afternoon fixing. Some mining companies use fixings to sell production. Up to $1,150? The dollar index, currently at 75.386, has dropped this year on record-low US interest rates and increased government borrowing to combat recession. Gold priced in dollars tends to move in the opposite direction to the US currency. “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.” News last week of bullion purchases by the Indian and Sri Lankan governments raised speculation other countries will follow suit. Analysts at Bank of America Merrill Lynch, Societe Generale SA and Barclays Capital have forecast further purchases by central banks, already the biggest holders. “Gold looks to be on target to hit $1,300 before the end of the year,” said Wallace Ng, Hong Kong-based chief trader at Fortis Bank’s commodity-derivatives unit. “It will still be the dollar in the driving seat.” 1980 peak The metal remains below its all-time high after accounting for inflation. Spot gold’s $850-an-ounce peak in 1980 equates to $2,227.84 today after adjusting for changes in prices, according to the US Labour Department’s inflation calculator. “We will not see less than the $1,000 level again,” Faber said at a conference yesterday. The former Drexel Burnham Lambert banker publishes the Gloom Boom & Doom Report investment newsletter. “Central banks are all the same,” Faber said. “They are printers. Gold is maybe cheaper today than in 2001, given the interest rates. You have to own physical gold.” The rally in futures has lifted spot gold’s 14-day relative-strength index, a gauge of whether a commodity or security is overbought or oversold, above the level of 70 viewed by some investors as a signal for a retreat. Today’s index was 72.32, according to Bloomberg data. “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.” Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, were unchanged for a second day at 1,114.44 tons yesterday, its website showed. The holdings reached a record 1,134 tons on June 1.

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