Gold Retreats after Rally as Stronger Dollar Reduces Demand

Gold retreated, after the biggest one-day rally in more than a year, as a stronger dollar curbed demand for the metal as a protection of wealth. Silver and platinum dropped.

Gold jumped 3.8 percent on 1 December, reaching a one-month high. It rebounded from a three-week low as crude oil reversed a drop to the lowest in five years and as some investors closed out bets on lower prices.

The greenback advanced to the highest since 2009 on 1 December amid expectations the Federal Reserve will raise interest rates next year, reducing gold’s allure because the metal generally offers investors returns only through price gains.

The dollar and crude “will continue being crucial for gold’s further trajectory. “If crude oil fails to sustain its overnight gains and if the dollar holds on to its recent gains, gold is likely to fall.”

Futures trading volume on the Comex was 50 percent above the 100-day average for this time of day, data compiled by Bloomberg show. Before rebounding yesterday, prices dropped as much as 2.1 percent in London after Swiss voters rejected a plan for their central bank to acquire more bullion.