Gold futures in New York fell in choppy trade early on Thursday for a third straight session on the back of a dollar rise and selling related to the start of delivery period for December futures. "As the dollar begins to rally, hyou are going to see the gold market come down," said Leonard Kaplan, president of Prospector Asset Management at Evanston, Illinois.
At 10:36 am EST (1536 GMT), December gold on the Comex division of the New York Mercantile Exchange was down $3.50 at $796.80 an ounce, trading between $794.30 and $807.80. The dollar rose broadly on Thursday as investors bet that the perceived likelihood of more US interest rate cuts will help avoid a recession. Expectations of a Federal Reserve rate cut next month and of more to come in 2008 got a boost on Wednesday after Fed Vice Chairman Donald Kohn said that renewed financial market turmoil could slow the US economy more abruptly than thought.
Strengthened crude oil boosted gold's appeal as a hedge against inflation. The December contract hit a contract peak of $848 on November 7 and a two-week high of $837.20 on Monday. It has fallen as much as $50 from its Monday high due to a dollar rise and weaker crude oil.
Spot gold was quoted at $796.15/796.85 an ounce, compared with $803.70/804.40 in New York Wednesday afternoon. London bullion dealers fixed the afternoon spot reference price at $794.50. Comex December silver fell 11.0 cents to $14.225 an ounce, trading between $14.150 and $14.500.
Spot silver was quoted at $14.23/14.28 an ounce, compared with $14.40/14.45 late Wednesday in New York. London silver was fixed at $14.240. Nymex January platinum was up 20 cents at $1,438.50 an ounce. Spot platinum was quoted at $1,443/1,447. December palladium dropped $3.75 or 1.1 percent to $342.50 an ounce. Spot palladium fetched $345/349.