Gold Falls Most in Five Weeks

Gold tumbled the most in five weeks as the dollar rallied, reducing the appeal of the precious metal as an alternative investment. Silver also declined.

The dollar climbed as much as 0.5 percent against a weighted basket of the euro, yen and four other major currencies. The Federal Reserve may begin to raise U.S. borrowing costs this year to curb inflation. Crude oil fell to around $129 a barrel after reaching a record $135.09 on May 22.

Gold futures for June delivery dropped $19.60, or 2.2 percent, to $885.40 an ounce at 9:23 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest percentage drop for a most-active contract since April 18. The metal, down for the third straight day, has dropped 14 percent from the record $1,033.90 on March 17.

Silver futures for July delivery plunged 54 cents, or 3.1 percent, to $16.875 an ounce. Before today, the price advanced 17 percent this year, while gold climbed 8 percent., Bloomberg
5/29/2008 7:44:29 AM