Gold Falls as Some Investors Sell Following Advance to Record-High Price

Gold fell in New York as some investors sold the metal after prices rallied to a record on concern about European debt and faster inflation. Silver touched a 31-year high.

Bullion futures reached a record $1,489.70 an ounce today. China increased banks’ reserve requirements to cool inflation that quickened in March to the fastest pace since 2008. The euro weakened against the dollar on speculation Greece will be unable to avoid a default. Unrest in the Middle East and North Africa and concerns about Japan’s nuclear crisis also helped gold’s gain this year.

“A further pullback could be seen in gold and silver given the gains seen in recent weeks,” James Moore, an analyst at TheBullionDesk.com in London, said in a report to clients. Still, “rising debt problems could dampen economic recovery in the euro zone, and when coupled with other factors such as inflation, Middle East and North African unrest and the impact of Japan’s earthquake, we expect dip-buying to underpin the metals.”

Gold futures for June delivery fell $5.80, or 0.4 percent, to $1,480.20 an ounce by 8 a.m. on the Comex in New York. The metal for immediate delivery in London was 0.5 percent lower at $1,479.65 an ounce after reaching a record $1,488.68.

The cost of insuring Greek government debt rose to a record today. Greece isn’t discussing restructuring its debt, Finance Minister George Papaconstantinou said April 16 in Washington. Greece received a bailout from the European Union and the International Monetary Fund last year, and has been followed by Ireland and Portugal in seeking aid.

Reserve ratios will rise a half point from April 21, the People’s Bank of China said on its website yesterday. The European Central Bank this month raised interest rates from a record low as inflation in the region quickened to 2.7 percent in March, the fastest pace since October 2008.

Libyan rebels repelled an attack from forces loyal to Muammar Qaddafi on the city of Ajdabiya, defending the front line that runs between the country’s two biggest cities. Rebels have struggled for weeks to take and hold cities in central Libya. Yemen’s opposition coalition rejected a plan by six Gulf states to end unrest in the Arabian country, saying that the swift departure of Yemen’s President Ali Abdullah Saleh isn’t negotiable.

Silver for May delivery in New York climbed as much as 1.9 percent to $43.38 an ounce, the highest price since January 1980, the year futures reached a record $50.35. The metal was last up 0.5 percent at $42.765 and has surged 38 percent in 2011.

Palladium for June delivery was down 2.4 percent at $749.35 an ounce. Platinum for July delivery fell 0.6 percent to $1,784.10 an ounce. www.bloomberg.com

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