Gold Falls for First Time in Four Days as Some Investors Sell After Rally

Gold fell in New York as some investors sold the precious metal after prices rallied for three days on demand for a store of value amid Europe’s debt crisis.

Gold earlier traded about 2.3 percent from a record. European equities climbed after China’s foreign exchange regulator said it isn’t reviewing its euro holdings. Assets in the world’s largest gold-backed exchange-traded fund increased to a record.

Prices fell “as profit-taking emerged,” said James Moore, an analyst at TheBullionDesk.com in London. “The steady influx of investment demand and continued concerns over European debt” and rising inflation mean gold prices may continue to climb, he said.

Gold futures for August delivery lost $5.60, or 0.5 percent, to $1,209.70 an ounce by 8:33 a.m. on the Comex in New York. Prices earlier climbed to $1,220.60. Bullion for immediate delivery in London was 0.3 percent lower at $1,208.30.

The metal fell to $1,210.75 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $1,212 at yesterday’s afternoon fixing.

Bullion has gained 10 percent this year and is heading for a 10th annual increase, the longest stretch of gains since at least 1920. Gold futures climbed to a record $1,249.70 an ounce on May 14 as investors sought to protect their wealth amid Europe’s sovereign-debt crisis.

“Investors are still concerned about” European debt, said Hwang Il Doo, a Seoul-based trader with Korea Exchange Bank Futures Co. “Gold will continue to be bullish.”

SPDR Record

China’s State Administration of Foreign Exchange said reports that it was reviewing its euro holdings are “groundless,” and that Europe has been and will remain a major market for investing the Asian nation’s exchange reserves. The Financial Times reported yesterday that Chinese officials met with foreign bankers because of concerns about exposure to Europe, without saying where it got the information.

Holdings in the SPDR Gold Trust, the biggest ETF backed by bullion, increased by 0.31 metric ton to a record 1,267.63 tons yesterday, according to the company’s website. Global holdings rose 1 ton to 1,981.2 tons yesterday, according to Bloomberg data tracking 10 providers.

“The U.S. economy is faring better, while uncertainty over the euro zone economic outlook for the remainder of 2010 still holds and will help to support gold prices,” said Andrey Kryuchenkov, an analyst at VTB Capital in London.

Gold will average $1,215 an ounce this year, up 6 percent from a previous forecast of $1,146, Deutsche Bank AG said in a report, raising estimates for every year through 2015. The biggest increase was for 2012, with the forecast increasing 60 percent to $1,600.

Platinum for July delivery in New York gained 0.6 percent to $1,538.90 an ounce. Palladium for September delivery added 0.4 percent to $450.25 an ounce. Silver for July delivery lost 0.4 percent to $18.24 an ounce.

To contact the reporters on this story: Sungwoo Park in Seoul at spark47@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net.

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