Gold declined the most in more than seven weeks as the dollar gained, eroding demand for the metal as an alternative investment.
The greenback gained as much as 0.6 percent against a basket of currencies as German Chancellor Angela Merkel and French President Francois Hollande clashed during the weekend on a timetable to introduce joint oversight of euro-area banks and the Ifo institute in Munich said its business-climate index dropped for a fifth straight month. Gold had rallied for five straight weeks on concern that global economic stimulus would devalue currencies and spur inflation.
“The uncertainty in Europe is pushing the dollar higher,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, said in a telephone interview. “After the huge run-up, we are also seeing some consolidation at current levels.”
Gold futures for December delivery slipped 0.8 percent to settle at $1,764.60 an ounce at 1:48 p.m. on the Comex in New York, the biggest drop for a most-active contract since Aug. 2. Bullion reached $1,790 on Sept. 21, the highest since Feb. 29, after the Federal Reserve announced a third round of quantitative easing and other central banks pledged more action.
Silver futures for December delivery slid 1.9 percent to $33.984 an ounce in New York, the biggest fall since Aug. 2.
On the New York Mercantile Exchange, platinum futures for October delivery declined 1 percent to $1,622 an ounce. Palladium futures for December delivery retreated 3.9 percent to $645.50 an ounce, the biggest slump since May 23.