Gold futures tumbled below $1,400 an ounce, extending the longest slump in almost three months, as the dollar’s rally eroded demand for the metal as an alternative investment. Silver fell to a three-week low.
Holdings in the SPDR Gold Trust, the biggest gold-backed exchange-traded product, will probably drop another 2 million to 4 million ounces as most institutional investor sales have occurred, Deutsche Bank AG said.
Gold traders are divided on whether surging demand for jewelry and bullion coins will sustain the rally in prices as a slump in holdings through exchange-traded products extended to the longest in more than eight years.
Hedge funds increased bets on a gold rally by the most in three weeks as central banks signaled no end to economic stimulus, driving prices higher just as analysts and traders turned the most bearish in three years.