By Pham-Duy Nguyen Oct. 16 (Bloomberg) -- Gold declined to a one-month low on speculation that investors will sell the precious metal to cover losses in other markets. Silver fell to the lowest since February 2006. U.S. stocks and the Reuters/Jefferies CRB Index of 19 raw materials fell for a third straight day. The dollar gained as much as 1 percent against a weighted basket of six major currencies. Before today, gold was little changed for the year as the Standard & Poor's 500 Index lost 38 percent while the CRB Index dropped 21 percent. ``The margin clerks are in control and they are selling what they can to raise capital,'' Dennis Gartman, an economist and editor of the Suffolk, Virginia-based Gartman Letter, said today in a note to clients. ``The dollar reigns supreme and that pressure on gold is manifest. Gold is doing quite well in terms of other commodities and relative to global equity markets.'' Gold futures for December delivery fell $34.50, or 4.1 percent, to $804.50 an ounce on the Comex division of the New York Mercantile Exchange, the biggest percentage decline for a most-active contract since Oct. 2. The price earlier dropped to $786.70, the lowest since Sept. 17. Silver futures for December delivery fell 54.5 cents, or 5.4 percent, to $9.635 an ounce on the Comex. The metal earlier fell to $9.25, the lowest since Feb. 16, 2006. The price has dropped 34 percent this year. Gold is down 4 percent in 2008. Dow Falls The Dow Jones Industrial Average fell as much as 380 points, or 4.4 percent, to 8,197.67 before paring losses. The index dropped 733 points yesterday. ``You don't have a 700-point drop in the Dow that is not followed by margin-call liquidations,'' said Jon Nadler, a senior analyst at Kitco Metals & Minerals Inc. in Montreal. Gold should be trading closer to $760, based on the dollar's strength, said Joel Crane, a metals strategist at Deutsche Bank AG in New York. ``Perhaps gold is behaving as it should,'' Crane said. Gold is priced in dollars and generally moves in the opposite direction of the U.S. currency. The Dollar Index is up 7.7 percent this year after being down as much as 7 percent in April. Gold had gained as much as 20 percent this year, touching a record $1,033.90 in March, as interest rate cuts sent the dollar to an all-time low against the euro in July. ``I'm short gold and long the dollar,'' said Ron Goodis, retail trading director for Equidex Brokerage Group Inc. in Closter, New Jersey. ``That's the trend.'' Gold's losses accelerated after the price fell below $822, said Ralph Preston, a futures analyst at Heritage West Futures Inc. in San Diego. ``This is a technical move,'' Preston said. ``We're in a clear consolidation period. We're not getting a buy signal.'' To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

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