BLOOMBERG REPORTS GOLD IN BEAR

Gold Has Biggest Weekly Drop in 25 Years as Dollar Strengthens
By Pham-Duy Nguyen

Aug. 15 (Bloomberg) -- Gold fell below $800 an ounce, capping the biggest weekly slide in 25 years, as the dollar surged against the euro, reducing the appeal of the metal as an alternative investment. Silver dropped as much as 14 percent.
The dollar headed for a fifth straight weekly gain against the euro as economies in Europe slow. Gold generally moves in tandem with the euro as an alternative to the dollar. The metal plunged into a bear market this week, declining as much as 25 percent from a record $1,033.90 an ounce reached on March 17.
``There's just a lot of long liquidation,'' said Joel Crane, a metals strategist at Deutsche Bank AG in New York. ``Commodities are priced in U.S. dollars. There's no getting around that.''
Gold futures for December delivery fell $22.40, or 2.8 percent, to $792.10 an ounce on the Comex division of the New York Mercantile Exchange. The metal fell 8.4 percent this week, the biggest decline for a most-active contract since Feb. 25, 1983.
Earlier, gold touched $777.70, the lowest for a most-active contract since Nov. 20 and the first time the price dropped below $800 since Dec. 21. Gold has fallen every day this month except for a 2.1 percent gain on Aug. 13.
Silver futures for December delivery fell $1.43, or 10 percent, to $12.93 an ounce on the Comex, the biggest decline for a most-active contract since June 13, 2006, when the metal shed 13 percent. Earlier the price touched $12.305, the lowest since Sept. 5.
Commodity Slump
The Reuters/Jefferies CRB Index of 19 commodities tumbled as much as 2.7 percent to 379.07, the lowest since March 20, as silver, soybeans and corn lead the drop. The index has dropped as much as 20 percent since reaching a record July 3, descending into a bear market.
Silver is the third-biggest loser on the CRB this year, down 13 percent, and gold was the fourth biggest after dropping 5.5 percent.
The dollar touched the highest against the euro in almost six months and climbed to an eight-month high versus the yen. Investors sold commodities and bought U.S.-denominated assets on speculation the slowdown that began in the U.S. will spread to other countries, analysts said.
Economic Slowing
``People are not clamoring to the dollar because our economy is strong,'' said Tom Hartmann, a commodity analyst at Altavest Worldwide Trading Inc. in Mission Viejo, California. ``We've already started slowing and it's going to catch up in other countries.''
A housing slump and a credit crisis that threatened to push the U.S. economy into a recession spurred the Federal Reserve to cut the benchmark interest rate 3.25 percentage points between September and April. The federal funds rate is now at 2 percent.
While the U.S. cut rates, the European Central Bank held their main rate steady at 4 percent from June 2007 to July 2008 to fight inflation as commodities such as oil, corn and gold soared to records. After raising the rate by 25 basis points to 4.25 percent in July, policy makers kept the rate unchanged at their August meeting.
The euro traded as low as $1.4659 today. It reached a record $1.6038 on July 15.
``We are saying this is euro weakness, not dollar strength,'' said Crane of Deutsche Bank. ``We're not convinced that the U.S. dollar can stage a meaningful rebound. At these levels, a lot of these commodities are looking attractive.''
Silver Falls
Silver, which has wider industrial applications than gold, has fallen 27 percent this month as commodities plunged on concern a global slowdown may cut demand for raw materials. Crude oil traded as low as $111.34 a barrel today, down 24 percent from the July record.
``It's just stops cascading into stops,'' said Frank McGhee, a head dealer at Integrated Brokerage Services LLC in Chicago, said of silver's decline in overnight trading. ``There was no event. This was just throwing in the towel out of exhaustion.''