Gold prices dropped the most in a more than a week as the dollar rebounded from a two-week low, reducing demand for the precious metal as an alternative asset.
The greenback rose as much as 0.5 percent against a basket of currencies after European policy makers and Greek bondholders failed to reach agreement on a debt-swap plan. The MSCI All- Country World Index of equities declined as much as 1 percent.
“The markets are taking a hit because everyone was expecting Greece to come up with a plan,” Adam Klopfenstein, a market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “People are largely in a risk- off mode today.”
Gold futures for February delivery dropped 0.8 percent to $1,665.30 an ounce at 10:10 a.m. on the Comex in New York. A close at that level would mark the biggest fall for a most- active contract since Jan. 13. Yesterday, prices touched $1,681.80, the highest since Dec. 12.
Gold “may be vulnerable to profit-taking, with physical buying reduced due to Chinese holidays,” James Moore, an analyst at TheBullionDesk.com in London, wrote in a report.
The most-actively traded option contracts today were February $1,650 puts, with 727 lots changing hands as of 9:58 a.m., exchange data show. The contract surged 50 percent today, the most since Dec. 14.
Silver futures for March delivery fell 0.6 percent to $32.07 an ounce, declining for the first time in three sessions.
Financial markets in Asian countries including China and South Korea were shut today for the Lunar New Year holiday.
