Gold futures fell as the prospect of financial support from China eased concern that the European debt crisis will worsen, eroding demand for the metal as a haven.
China is willing to buy the bonds of nations hit by the debt crisis, said Zhang Xiaoqiang, a vice chairman of the National Development and Reform Commission, according to Caijing magazine. Equities rallied in the U.S. for a third day, and the dollar rose against a basket of major currencies, reducing the appeal of gold as an alternative investment.
“Europe is trying to find ways to ward off the crisis,” Tom Pawlicki, a Chicago-based analyst at MF Global Holdings Ltd., said in a telephone interview. “The dollar being slightly up is also acting against gold.”
Gold futures for December delivery fell $3.60, or 0.2 percent, to settle at $1,826.50 an ounce at 1:59 p.m. on the Comex in New York, after slumping as much as 0.9 percent.
Prices still are up 44 percent in the past year and touched a record $1,923.70 on Sept. 6 as Europe’s crisis deepened. Moody’s Investors Service lowered credit ratings for Societe Generale SA and Credit Agricole SA, two of France’s three largest banks by assets. French lenders top the list of Greek creditors.
“The market had already discounted this piece of news,” Pawlicki said.
German Chancellor Angela Merkel has said she won’t let Greece fall into “uncontrolled insolvency” because the risk of contagion for countries that share the common European currency “is very big.” German and French leaders expressed support for Greece remaining in the euro monetary union.
Gold has gained 29 percent in 2011, heading for the 11th straight annual gain.
The price may surge to $2,500 by 2013, said Richard O’Brien, the chief executive officer of Newmont Mining Corp., the largest U.S. gold producer.
“There’s going to be a lot of volatility, up, but volatile,” O’Brien said in a Bloomberg Television interview in Dalian, China. “That’s the key point, up but volatile. I don’t think there’s a lot of downside.”
Silver futures for December delivery gained 66 cents, or 1.6 percent, to close at $40.533 an ounce on the Comex, declining for the third time in four sessions.
On the New York Mercantile Exchange, platinum futures for October delivery rose $2.40, or 0.1 percent, to $1,815.90 an ounce, advancing for the second straight day. Palladium futures for December delivery fell $7.50, or 1 percent, to $721 an ounce.