Gold declined after a rally to a record prompted some investors sell and as the strengthening dollar reduced the appeal of precious metals as an alternative asset. Silver fell, reversing an earlier gain. Immediate-delivery gold lost as much as 1 percent to $1,388.45 an ounce before trading at $1,391.90 an ounce at 12:38 p.m. in Seoul. The metal yesterday touched an all-time high of $1,431.25. Bullion priced in euros also reached a record yesterday. Silver dropped as much as 0.7 percent to $28.465 an ounce, reversing an earlier gain of as much as 1.4 percent, and last traded at $28.7262. “Recent price gains have led to a profit-taking by some investors,” Hwang Il Doo, a senior trader at Korea Exchange Bank Futures Co. in Seoul, said by phone today. “I don’t think precious metals turned to a downtrend. This is temporary profit- taking before the end of the year. Gold will continue to be favored through next year as a haven.” The dollar rose for a third day against most of its major counterparts on expectations an extension of tax cuts will bolster an economic recovery in the U.S. President Barack Obama agreed to extend Bush-era tax cuts for two years. A report tomorrow is forecast to show U.S. initial jobless claims declined. Bullion typically moves inversely to the greenback. Gold has jumped 27 percent this year, heading for the 10th straight annual gain, after governments spent trillions of dollars and kept borrowing costs low to bolster economies hurt by the most severe global recession since World War II. Futures for February delivery fell as much as 1.4 percent to $1,388.90 an ounce on the Comex in New York. Palladium for immediate delivery lost 0.3 percent to $730.25 an ounce, reversing an earlier advance. The price has jumped 79 percent this year. Immediate-delivery platinum declined 0.5 percent to $1,682.75 an ounce. --Yoshiaki Nohara in Tokyo and Catarina Saraiva in New York. Editors: Jarrett Banks, Ravil Shirodkar To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net. To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

Source