Gold dropped the most in two weeks in London as stocks rose around the world on speculation government measures will help revive the global economy, reducing demand for the precious metal as a haven. Deutsche Bank AG, Barclays Plc and Citigroup Inc. climbed at least 10 percent as President Barack Obama’s administration prepared a plan to absorb toxic bank assets. Gold reached a three-month high of $916.30 on Jan. 26 and holdings in exchange- traded funds climbed to records as investors sought a store of value. Gold’s drop “is related to the movements we’re seeing in financial stocks,” Peter Fertig, a consultant for Dresdner Kleinwort, said by phone from Hainburg, Germany. “Last week, gold profited from safe-haven buying. Some investors who bought gold on those fears might be switching back into stocks.” Gold for immediate delivery slipped as much as $15.74, or 1.8 percent, to $883.47 an ounce and traded at $888.76 by 11:18 a.m. in London. February futures fell $11.70, or 1.3 percent, to $887.80 in electronic trading on the Comex division of the New York Mercantile Exchange. The metal fell to $891.25 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $897.50.25 at yesterday’s afternoon fixing. Spot prices are now little changed for the year after gaining as much as 3.6 percent. “Gold might have reached a temporary peak and profit taking is of course another factor,” Fertig said, adding that the metal may fall to $850 an ounce in the next few days. Bullion has also lost its negative correlation with the dollar the past week, he said. Fed Meeting “Safe-haven inflows and moving out of safe-haven investment is the dominating factor” at the moment, Fertig said. The dollar dropped as much as 1.2 percent against the euro before the Federal Reserve ends a two-day meeting today, at which policy makers may announce plans to buy more assets to boost credit markets. Gold generally moves in the opposite direction to the U.S. currency. The central bank probably won’t alter borrowing costs today and for the remainder of 2009, according to a Bloomberg survey of analysts. The Fed cut the main rate to a record-low 0.25 percent or less on Dec. 16. Among other metals for immediate delivery in London, silver declined 0.5 percent to $12.045 an ounce. Platinum slipped $4.50, or 0.5 percent, to $945.50 an ounce, and palladium was 0.9 percent lower at $189.25 an ounce. Japan’s three-largest carmakers today said they cut global production last month as the recession and a credit crunch damped demand for new automobiles. Toyota Motor Corp. slashed output 25 percent, Honda Motor Co. 7.5 percent, and Nissan Motor Co. 36 percent. Automakers account for about half of global platinum and palladium consumption. Platinum Jewelry Still, platinum supply is likely to fall short of demand in 2009, UBS AG analyst John Reade said today in a note. While “auto demand will be well short of prior forecasts, we expect South African and Russian production will continue to disappoint,” Reade wrote. “Jewelry demand will be stronger than most people expect, especially from China and Japan,” and “investment demand in physical platinum could surprise on the upside.” Silver held in Barclays Plc’s iShares Silver Trust, the biggest exchange-traded fund backed by the metal, rose by 199 metric tons to 7,342.7 tons on Jan. 26.

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