China's gold output increased 13 percent in the first nine months of this year, closing in on South Africa's century-long reign as the world's largest producer. Gold is trading above the 25-day, 55-day, 100-day and 200-day moving averages, indicating for some traders who use charts to gauge direction that prices may stall.
``I can see enough things in front of me to be worried'' that the rally may stall, said Robin Wilkin, head of commodities and foreign exchange technical analysis at JPMorgan Chase & Co. in London. ``Upside momentum is starting to die off.''
Gold for immediate delivery dropped $7.40, or 0.9 percent, to $784.40 an ounce at 9:40 a.m. in London, the first decline since Oct. 22. Prices climbed 7 percent in the past three weeks to a 27-year high of $794.70 yesterday as the dollar extended declines against the euro and crude oil prices gained. The dollar gained today and crude oil declined.
Today's drop may be enough to revive demand and send prices to $800 in the next day or two, Wilkin said. Over the next one or two weeks, prices may drop to $760 and then rebound to $820 or $850 by the second quarter of next year, he said.
Silver fell 24 cents, or 1.7 percent, to $14.275 an ounce.
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