(Bloomberg) -- Gold fell to a four-week low as the dollar climbed against the euro, eroding the appeal of precious metals and commodities as alternative investments. Silver also declined.
The dollar rose as much as 0.7 percent versus the euro on speculation the Federal Reserve will signal that it's close to pausing after six interest-rate reductions. Before today, gold and commodities gained more than 30 percent in the past 12 months, while the dollar slumped 13 percent against the euro.
``If, as we suspect, the Federal Reserve stands pat on rates, or signals that it is done for the time being, we could see the dollar strengthen, and lead to another bout of profit- talking in commodities,'' Edward Meir, an analyst at MF Global Ltd., said in a report.
Gold futures for June delivery fell $14, or 1.6 percent, to $881.50 an ounce at 9:29 a.m. on the Comex division of the New York Mercantile Exchange. The price earlier touched $878.60, the lowest for a most-active contract since April 1.
The Fed reduced borrowing costs by 3 percentage points to 2.25 percent from Sept. 18 to March 18. Gold reached a record $1,033.90 an ounce on March 17.
The U.S. currency headed for its first monthly advance this year against the euro as traders increased bets the Fed will stop lowering borrowing costs after a quarter-percentage point reduction tomorrow.
Silver futures for July delivery declined 46.3 cents, or 2.7 percent, to $16.66 an ounce. Before today, the price gained 26 percent in the past 12 months.
The Reuters/Jefferies CRB Index of 19 commodities dropped as much as 1.3 percent.
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