The seven-day relative strength index of the precious metal rose to 70 yesterday, a signal the metal may drop. Gold has gained 1.7 percent over the past two weeks and jumped the most in eight weeks in New York yesterday.
``It is a little overbought,'' said David Gornall, head of foreign exchange and bullion at Natexis Commodity Markets Ltd. in London. ``Gold gained quite a bit yesterday.''
Bullion for immediate delivery fell $1.15, or 0.2 percent, to $637.15 an ounce as of 10:43 a.m. in London. Gold futures for delivery in December on the Comex division of the New York Mercantile Exchange dropped $2.20, or 0.3 percent, to $644.70 an ounce.
Speculation central banks may accelerate sales of gold from their reserves may add to the metal's decline. Under an accord known as the Washington Agreement, European central banks can sell up to 500 tons of gold by Sept. 26 this year. They have sold 340 tons so far.
``People are watching closely'' to see central banks are selling,'' said Matthew Turner, an analyst at Virtual Metals Consulting in London. ``Over the medium term, we expect gold to trade a little lower.''
Among other precious metals, palladium fell $4, or 1.1 percent, to $348 an ounce, and platinum dropped $3, or 0.2 percent, to $1,266.50 an ounce. Silver rose 5 cents, or 0.4 percent, to $13.01 an ounce.
