Gold fell in New York on concern that an economic slowdown will erode demand for commodities, including precious metals.
The Reuters/Jefferies CRB Index of 19 commodities is down 6.2 per cent this year as the US struggles to recover from the worst recession since the Great Depression. Gold futures climbed to a seven-week high of $US1239.50 an ounce on August 19 and are 3 per cent below their record set on June 21.
"There's overall weakness in the markets on a slowing of the economy," said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. "You sell everything in this scenario, but the fear will come back and gold will catch a bid."
Gold futures for December delivery fell 30 US cents to close at $US1228.50 an ounce at on the Comex in New York. Prices swung between a gain of 0.4 per cent and a 0.4 per cent loss.
High prices may deter buyers even as some investors purchase gold as a safe haven, some analysts said. Gold has gained for three straight weeks.
A composite index based on a survey of euro-area purchasing managers in services and manufacturing industries declined to 56.1 from 56.7 in July, London-based Markit Economics said today. Economists expected a reading of 56.3, according to the median of 14 forecasts in a Bloomberg News survey. A reading above 50 indicates expansion.