Gold fell for the first time in seven days in London as growing concern that Europe’s debt crisis is worsening strengthened the dollar, curbing demand for the metal as an alternative investment. The dollar rose to a four-month high versus the euro after a meeting of European Union finance ministers failed to defuse the region’s escalating debt crisis. Gold, which typically moves counter to the greenback, yesterday climbed to the highest level in more than two weeks and today reached records in euros and pounds. “Because of the debt crisis in the euro zone, the euro is showing weakness” and that’s pressuring gold, said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. Still, “the debt crisis in Europe and the debt ceiling debate in the U.S. will play a role” in supporting bullion in the next few weeks, he said. Immediate-delivery gold fell $9.35, or 0.6 percent, to $1,544.13 an ounce by 10:06 a.m. in London. The metal yesterday touched $1,557.05, the highest price since June 22. Gold for August delivery was 0.3 percent lower at $1,544.10 an ounce on the Comex in New York. European finance ministers yesterday said they were considering using bond buybacks to ease Greece’s plight as bond yields surged in Italy and Spain. The announcement came after talks with bondholders on a swap of maturing Greek debt for new securities ran into opposition from the European Central Bank. All-Time Highs Gold is up 8.7 percent in 2011 after climbing the past 10 years, the longest run of gains in at least nine decades. Europe’s debt crisis helped bullion reach a record $1,577.57 on May 2. The metal climbed to all-time highs of 980.05 British pounds and 1,118.06 euros, and has gained 9 percent since July 1 in the shared currency. Most main industrial metals on the London Metal Exchange, crude oil futures and European equities declined today. “Right now investors are in risk-aversion mode as Europe’s debt crisis has once again been brought to the fore,” Zhao Jingjing, an analyst at Essence Futures Co., said by phone from Beijing. “While a stronger dollar may limit gold’s gains, it isn’t uncommon to see both rising in tandem as investors seek a safe haven.” In the third quarter “gold should outperform due to its safe haven role, a lingering soft patch, a persistent sovereign risk premium, and the continuation of negative real rates in gold’s important markets,” Edel Tully, a London-based analyst at UBS AG, said in a report dated yesterday. The metal will trade above $1,600 in the quarter, she said. Silver for immediate delivery fell 1.8 percent to $35.155 an ounce in London. Palladium declined 1.9 percent to $754.75 an ounce. Platinum was down 0.5 percent at $1,714.60 an ounce. UBS cut its 2011 silver forecast to $36 from $40 an ounce, lowered its palladium outlook to $800 from $825 and reduced its platinum estimate to $1,825 from $1,900. To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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