Sept. 17 (Bloomberg) -- Gold fell from an 18-month high in New York on concern that jewelry sales will decline following a rally that sent prices close to a record.

Gold demand in India, the world’s largest buyer, is 5 percent to 10 percent less than last year, UBS AG said on Sept. 8. Imports of the metal may slump 37 percent this year as incomes decline and costs increase, the Bombay Bullion Association Ltd. said last month. Gold has jumped 15 percent this year and traded today around $8 an ounce below the record.

“Jewelry demand remains weak and other physical demand is moderating,” said James Steel, an analyst at HSBC Securities in New York. “In the medium term, it may undermine the rally.”

Gold futures for December delivery fell $6.70, or 0.7 percent, to $1,013.50 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, the price reached $1,025.80, the highest for a most-active contract since climbing to the record $1,033.90 in March 2008.

Bullion for immediate delivery fell $1.68 to $1,015.62 at 3 p.m. New York time.

The metal fluctuated between gains and losses today, mirroring movements in the dollar. Some traders buy gold as the U.S. currency weakens to preserve purchasing power. The greenback touched the lowest level in almost a year against a basket of six major currencies.

“In the short term, gold will be investment- and dollar- driven, so it would not surprise me to see the price staying over $1,000 for longer,” Steel said. “Eventually, the lack of jewelry demand and the increase in scrap supplies will start to weigh on the market.”

Scrap sales, including used jewelry, will rise 22 percent in 2009, said Philip Klapwijk, the chairman of industry researcher GFMS Ltd.

Cash4Gold

At Cash4Gold LLC, which calls itself the world’s biggest used-gold buyer, inquiries from people interested in selling gold have gained “significantly” as prices rose over $1,000, Chief Executive Officer Jeff Aronson said in an interview last week.

Gold has closed above $1,000 for five straight sessions.

Silver futures for December delivery fell 16.5 cents, or 0.9 percent, to $17.265 an ounce on the Comex. The price has jumped 53 percent this year.