Gold drops to 3-wk low in worst run since February on dollar

LONDON: Gold today dropped for a fifth day in the worst run since February, falling to a three-week low as a stronger dollar curbed demand for an alternative investment and bullion holdings declined.

The gold fell 1.2 per cent to USD 1,408.53 an ounce, the lowest since April 23 and silver dropped 2 per cent to USD 22.94 an ounce.

Holdings in exchange-traded products dropped 6.2 metric tons to 2,219.7 tons, the lowest since July 2011.

The US Dollar Index, a measure against six major currencies, reached the highest level since July today. Gold fell 16 per cent this year, tumbling into a bear market last month, as some investors lost faith in the metal as a store of value and equities rallied.

A fifth straight drop would be the worst run since February 20. Bullion for June delivery was down 1.1 per cent at 1,409.20 dollar on the Comex in New York.

Gold ETP holdings are down 16 percent in 2013 after gaining every year since the first product was launched in 2003. While the sell-off has been faster than expected, a further drop in ETP holdings will probably mean more price declines, Goldman Sachs said.