Gold dropped from a one-week high as a rebound by the dollar curbed demand for the precious metal as alternative asset.
The euro fell as much as 0.4 percent against the greenback on concern that European Central Bank measures to support its banking sector won’t be enough to stem the region’s debt crisis. Gold headed for the first quarterly decline in more than three years as Europe’s fiscal woes eroded prospects for the global economy and commodity demand.
“As people take a closer look, they see that maybe things aren’t as good as they thought” in the European rescue effort, Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview.
Gold futures for February delivery dropped 0.2 percent to settle at $1,613.60 an ounce at 1:50 p.m. on the Comex in New York. Earlier, the price reached $1,643.70, the highest for a most-active contract since Dec. 14. The metal, down 0.5 percent this quarter, has climbed 14 percent in 2011.
The ECB awarded 489 billion euros ($640 billion) in three-year loans to the region’s banks in the latest attempt to tame the debt crisis.
“It’s being viewed as a Band-Aid solution,” McGhee said.
Silver futures for March delivery fell 1 percent to $29.249 an ounce on the Comex. The metal has declined 5.5 percent this year.
On the New York Mercantile Exchange, platinum futures for January delivery fell 0.1 percent to $1,431.70 an ounce. The price has dropped 19 percent this year.
Palladium futures for March delivery gained 0.9 percent to $634.10 an ounce. The metal has declined 21 percent in 2011.