London 20/07/2011 - Gold prices fell below the key $1,600 per ounce level in Europe on Wednesday, pulled back by profit-taking after a strong eleven-day performance, with investors also nervous ahead of a decisive eurozone meeting tomorrow. Spot gold was up $1.30 at $1,591.80/1,592.60 per ounce. The metal hit an all-time high of $1,610.30 in the previous session, before being caught in a wave of profit-taking and falling to an intraday low of $1,582.20. "Gold in US dollar terms stalled near our $1,612 target, and risk is a setback toward $1,550/1,560 before bulls resume the greater uptrend toward $1,635/1,670," broker Barclays Capital said. Continued signs that the global economic recovery was slower that expected and persistent debt woes in the US and Europe have benefitted gold's safe-haven qualities over the past few weeks, but a temporary pullback after eleven consecutive sessions of positive closes was also anticipated. "Even if we assume further price rises for precious metals in the long term, a boom is not a one-way street and the optimism on gold and silver especially was excessive recently in our view," broker Commerzbank said. The metal has also retreated from lifetime peaks in other currencies, including in euro - prices were currently trading at 1,125.70, some 1.7 lower than Monday’s high of 1,145.30 - and in sterling, with prices below the psychological 1,000 mark that had been exceeded on Monday. The US dollar was down at 1.42 versus the euro on Wednesday, while other commodities were mixed, with copper down below recent three-month highs of $9,873.50 per tonne and crude oil hovering around $98.7 per barrel. "Persisting uncertainty over the European debt situation …and the unresolved US debt ceiling issue are likely to direct renewed interest into precious metals," broker Credit Suisse said. On the macro side, the key event is a meeting of European politicians on Thursday, where the Greek debt crisis will again be discussed, as well as contagion risks to other European economies like Italy and Spain. "It seems unlikely that any real resolution can be found to this issue on this occasion and the prospect is there for more buying of gold by risk averse European investors - something that should be bullish for gold even if the dollar strengthens," a London trader said. Yesterday, German Chancellor Angela Merkel warned that a comprehensive resolution to Greece's debt issue was unlikely to be struck at tomorrow’s summit. She warned that "further steps will be necessary and not just one spectacular event which solves everything." In the US, fiscal woes continued to add to market jitters ahead of the August 2 deadline to increase the country's debt ceiling. Among other precious metals, silver fell 52 cents to $38.80/38.86 per ounce. Prices, which closely followed gold's movements over the past two weeks, hit a two-and-a-half month high of $40.89 per ounce on Monday, before retreating. Elsewhere, platinum dropped $10 to $1,762/1,772 per ounce - it touched a one-month high of $1,791 in the previous session - while palladium was down $5 to $786/792 per ounce, having reversed yesterday’s highs above $800.

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