Gold prices fell from a two-month high as US equities rebounded, eroding demand for the precious metal as a store of value.
The Standard & Poor's 500 Index rose as much as 2.9 per cent today after slumping 4.7 per cent last month. Gold gained 5.6 per cent in August, approaching the record $US1,266.50 an ounce.
"Gold is not cheap, so you're getting a little selling," said Leonard Kaplan, the president of Prospector Asset Management in Evanston, Illinois. "With interest rates so low, people are going anywhere they possibly can. Quantitative easing is good for everything."
Gold futures for December delivery fell $US2.20, or 0.2 per cent, to settle at $US1248.10 on the Comex in New York. Earlier, the price reached $US1256.60, the highest level since June 28.
The Federal Reserve has kept the benchmark interest rate from zero per cent to 0.25 per cent since December 2008 to revive the economy.
Fed officials agreed at last month's meeting to put a $US2.05 trillion floor on securities holdings and buy Treasuries to replace an estimated $US395 billion of mortgage assets that would be repaid from August through the end of 2011, according to minutes released yesterday.
Treasuries also fell as a report showed US manufacturing unexpectedly rose in August, reducing demand for a haven.
Gold's losses will be limited, some analysts said. Holdings in 10 exchange-traded products tracked by Bloomberg rose to a record yesterday. In the second quarter, investors purchased 291.3 metric tons in ETFs, boosting metal demand by 36 percent, according to the producer-funded World Gold Council.
