Gold fell to a three-month low as US-led forces bombed Baghdad and ground troops advanced toward the capital, diminishing investor demand for gold as a safe haven from slumping stocks.
Speculation that the war will end within a few weeks fueled an eighth straight day of gains by the Standard & Poor's 500 Index and the Dow Jones Industrial Average, leaving them higher year-to-date for the first time since January. Gold had reached a six-year high last month, partly on concern that war in the Middle East would drag down equities.
"The war premium is evaporating in pretty quick order," said Jack Thompson, vice chairman of Toronto-based Barrick Gold Corp, the world's third-biggest gold producer.
Gold for April delivery fell US$6.90, or 2.1 percent, to US$326.10 an ounce on the Comex division of the New York Mercantile Exchange, the lowest closing price for a most-active contract since Dec. 11. Prices have fallen 6.3 percent this year, including a 3.1 percent decline this week.
Today's slide accelerated after prices fell below US$330.90, the 200-day moving average, triggering selling by investors who base buying and selling decisions on graphs and charts, said Frank McGhee, head trader at gold-trading company Alliance Financial LLC in Chicago.
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