Gold Set for Biggest Weekly Loss in Two Years

Gold fell for a third day in London and headed for the biggest weekly loss since May as easing concerns about Europe’s debt crisis cut demand for the metal as a protection of wealth.

European equities were little changed near a one-week high after the European Central Bank said it will coordinate with the Federal Reserve and other central banks to ensure euro-area lenders have enough dollars and Germany and France assured investors that Greece will remain a member of the euro. Gold touched a record $1,921.15 an ounce on Sept. 6.

Policy makers “are looking for a solution and in the short-term the market may react to that,” Afshin Nabavi, a senior vice president at bullion refiner MKS Finance SA in Geneva, said today by phone. “It would be a healthy move for the market if we see a correction. I don’t see miracles happening that quickly” and gold may rebound toward $2,000, he said.

Immediate-delivery gold fell as much as $25.90, or 1.4 percent, to $1,762.68 an ounce and traded at $1,775.07 by 9:24 a.m. in London. Prices are down 4.3 percent this week. Gold for December delivery was 0.2 percent lower at $1,778 on the Comex in New York.

Bullion is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. The metal is up 25 percent this year, outperforming global stocks, commodities and Treasuries.

Play Brinkmanship

ECB President Jean-Claude Trichet pressed euro-area governments to take decisive action to halt the debt crisis and show “unity of purpose” at today’s gathering of European finance ministers in Wroclaw, Poland. Eighteen months of crisis- fighting and 256 billion euros ($355.1 billion) in aid for Greece, Ireland and Portugal have failed to stabilize markets as the turmoil spread to Italy and Spain.

“They’re only really geared to put out spot fires and play brinkmanship rather than to deliver a killer package that will actually resolve all their issues,” Tom Price, an analyst at UBS AG, said by phone from Sydney. “In that environment, the problem drags on for years, not months, and it’s a great environment for gold.”

Gold exchange-traded-product holdings fell 4.3 metric tons to 2,145.2 tons yesterday, data compiled by Bloomberg show. Assets reached a record 2,216.8 tons on Aug. 8.

Silver for immediate delivery fell 0.3 percent to $39.7075 an ounce. Platinum gained 0.7 percent to $1,798.47 an ounce after touching $1,768.22, the lowest level in a month. Palladium was 1.1 percent higher at $733.25 an ounce.

Platinum is trading above gold after dropping below it this week. An ounce of platinum bought 1.18 ounces of gold on average this year, down from 1.32 ounces in 2010. The ratio last month fell to the lowest level in almost two decades.

read more: Olympus Wealth Management