Gold dropped the most in a year as some investors sold the metal after signs of slowing growth spurred a rally to a record $1,917.90 an ounce. The relative-strength index of futures in New York has topped 70 since Aug. 8, a signal to some investors that prices were poised to decline. Bullion has jumped 14 percent in August amid speculation that Federal Reserve Chairman Ben S. Bernanke will signal further measures to stimulate the U.S. economy later this week and as debt crises spurred demand for haven assets. “Gold looks very bubbly,” Matt Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “Gold’s going to continue to suck everybody in. There’s too much risk of a wicked correction lurking around the corner to enter the trade right now.” Gold futures for December delivery fell $30.60, or 1.6 percent, to settle at $1,861.30 on the Comex in New York. In after-hours trading, the metal plunged as much as 3.5 percent, the biggest intraday decline since July 1, 2010. Before today, prices surged 17 percent in three weeks. The metal is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify their holdings away from equities and some currencies. Bullion also reached all-time highs in euros, British pounds and Swiss francs today. ‘Liquidation’ “A little stability in the stock market triggered this trailing stop liquidation,” said Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago. The Standard & Poor’s 500 Index rose as much as 3.4 percent. Holdings in bullion-backed exchange-traded products fell for a second day yesterday, sliding 4.7 metric tons to 2,206.4 tons, data compiled by Bloomberg show. Assets reached a record 2,216.8 tons on Aug. 8. UBS AG raised its one-month gold forecast to $1,950 from $1,725 and increased its three-month outlook to $2,100 from $1,850. Yesterday, the bank’s physical sales to India, the top global buyer, were the highest since May 10, according to UBS analyst Edel Tully said. Bernanke is scheduled to speak Aug. 26 in Jackson Hole, Wyoming, at an annual conference sponsored by the Fed Bank of Kansas City. “In the long-term, gold is attractive,” Zeman of Kingsview said. “Fiscal deficits are completely out of control. It’s no wonder that investors are losing faith in paper money.” To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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