Gold declined, extending a monthly drop in May, as investor concern eased that Greece may become the first euro country to default, paring demand for the precious metal as a haven. Silver also dropped. Immediate-delivery gold fell for a second day, dropping as much as 0.4 percent to $1,529.85 an ounce, before trading at $1,530.50 at 11:24 a.m. in Singapore. The metal reached $1,540.78 yesterday, the highest level since May 4. Cash silver weakened as much as 1 percent to $38.1275 an ounce. Greece will probably get the loans needed to avoid default, Fitch Ratings said yesterday. While filling a financing hole of about 30 billion euros ($43 billion) next year, the European Union also probably won’t force Greece to extend maturities, a step opposed by the European Central Bank, Fitch said in a note. “Some investors are emboldened by signs that Greece will get a bailout and avoid default, and are selling their gold,” said Hwang Il Doo, a Seoul-based senior trader at KEB Futures Co. “Minor losses are inevitable for gold to extend its bull run.” Bullion is extending a 10-year winning streak, touching a record $1,577.57 an ounce on May 2, as investors seek protection against Europe’s sovereign-debt crisis, weaker currencies and resurgent inflation. Central-bank buying has also helped to boost prices, which have gained 7.8 percent this year. Central Bank Buying Russia and Mexico added gold in April now valued at almost $1 billion to their reserves. Russia bought 13.72 metric tons in the month, raising holdings to 824.83 tons, according to data on the International Monetary Fund’s website. Mexico’s assets rose 5.93 tons to 106.14 tons, the data show. “Demand from central banks is a main supporting factor for gold prices,” Eugen Weinberg, Frankfurt-based head of commodity research at Commerzbank AG, wrote in a note. Asian stocks rose for a second day even after China’s manufacturing expanded at the slowest pace in nine months in May as the government extended a campaign to cool inflation and the property market. The dollar fell against six major currencies today, following yesterday’s 0.6 percent drop. “Cautious optimism regarding a Greek bailout decreased risk aversion in markets,” said Ong Yi Ling, Singapore-based analyst with Phillip Futures Pte. “Despite weakness in the dollar, gold failed to rally as other riskier assets were favored instead.” Spot palladium decreased 0.2 percent to $777 an ounce, while platinum dropped 0.2 percent to $1,825.50 an ounce. To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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