By Kim Kyoungwha
(Bloomberg) – Gold declined for a third day on speculation that some investors locked-in gains from a rally to a record last week, as news of Dubai World’ plan to delay loan payments rattled global markets.

Bullion slumped as much as 4.2 percent on Nov. 27 after the Dollar Index, a six-currency gauge of the dollar’s value, jumped 1 percent, aided by haven demand. The U.A.E. central bank said it “stands behind” the country’s local and foreign banks, which would face losses from Dubai World’s possible default.

Dubai’s debt problem “certainly heightened investors’ anxiety,” said Toby Hassall, an analyst with CWA Global Markets Pty in Sydney. “There is a risk premium. Still, it is fairly early days and we’ll have to see how the markets will react. If we do see more flight to safety to the U.S. dollar then we could see commodity prices under some pressure.”

Gold for immediate delivery weakened 0.4 percent to $1,172.62 at 8:39 a.m. in Singapore. The metal reached an all- time high $1,195.13 last week. February gold shed 0.1 percent to $1,173.80 an ounce on the New York Mercantile Exchange’s Comex division.

Dubai World, a state-owned holding company struggling with $59 billion of debt and other liabilities, said Nov. 25 it would seek a standstill agreement with creditors and an extension of loan maturities. The news led to a slump in global financial markets. The Reuters/Jefferies CRB Index slid 1.9 percent on Nov. 27, the steepest drop since Oct. 30.

Gold, up 33 percent this year, is set for a ninth annual gain as central banks, pension funds and individual buyers seek to protect themselves from potential currency debasement and inflation.

Among other precious metals, silver rose 0.1 percent to $18.3175 an ounce, platinum gained 0.7 percent to $1,450.50 an ounce and palladium increased 0.3 percent to $365.75 an ounce.

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