Gold futures fell the most in two weeks as the euro's rebound reduced demand for the precious metal as a haven against European-debt concerns.
The euro was headed for the third straight weekly gain after topping $US1.30 for the first time since May 10. Gold rose to a record $US1,266.50 an ounce on June 21 and surged to all-time highs in euros, UK pounds and Swiss francs last month amid Europe's fiscal crisis.
``There's continued unwinding of the gold-euro trade,'' said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. ``As the euro firms up, the risk premium comes off.''
Gold futures for August delivery fell $US20.10, or 1.7 per cent, to $US1,188.20 on the Comex in New York, the biggest drop for a most-active contract since July 1. The metal lost 1.8 per cent this week.
Gold historically has moved in tandem with the euro as an alternative to the US dollar. This year, as Europe's sovereign-debt woes unfolded, investors sold euros and bought gold and US dollars as stores of value.
``Gold in euro terms may now be a broken trade,'' said Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter. Earlier this year, he recommended holding gold priced in other currencies.
`Running for exits'
Precious metals with wider industrial applications fell on signs that the US economic recovery is slowing, eroding demand for raw materials.
``Investors are running for the exits,'' said Adam Klopfenstein, a senior market strategist at Lind-Waldock, a broker in Chicago. ``The slowdown in consumer spending and the worse-than-expected earnings are taking some of the bullishness out of commodities.''
Silver futures for September delivery fell 57.4 cents, or 3.1 per cent, to $US17.788 an ounce on the Comex. The price was down 1.6 per cent for the week.
Platinum futures for October delivery dropped $US21.60, or 1.4 per cent, to $US1,512.10 an ounce on the New York Mercantile Exchange. The metal lost 1.4 per cent this week.
Palladium futures for September delivery declined $US18.60, or 4 per cent, to $US448.60 an ounce on the Nymex, for a weekly decline of 1.8 per cent.
US equities tumbled after General Electric Co., Bank of America Corp. and Citigroup Inc. reported revenue that trailed estimates by analysts. Consumer confidence declined in July to the lowest level in a year.
Copper prices dropped as much as 2.8 per cent. Energy futures also declined. The Reuters/Jefferies CRB Index of 19 raw materials fell as much as 1.3 per cent.
Bloomberg News
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