Gold, trading within 0.6 percent of an all-time high, may decline after policy makers in Europe and U.S. made progress tackling sovereign-debt challenges, trimming demand for wealth protection. Immediate-delivery bullion was little changed at $1,601.70 an ounce at 11:12 a.m. in Singapore. Spot gold advanced to a record $1,610.10 on July 19 as potential defaults in the U.S. and Greece spurred haven demand. German Chancellor Angela Merkel and French President Nicolas Sarkozy agreed on a joint position to solve Greece’s debt crisis before a meeting of European leaders today. In the U.S., the Obama administration signaled it may accept a short- term rise in the country’s debt limit before an Aug. 2 deadline. “Gold may see more negative pressure in the next few days if Europe and the U.S. make progress” in fixing their fiscal problems, Australia & New Zealand Banking Group Ltd. analysts including Mark Pervan wrote in a note today. Gold for August delivery in New York rose for the first time in three days, gaining as much as 0.4 percent to $1,603.80. Holdings of the metal in exchange-traded products increased 0.1 percent to 2,122.619 metric tons yesterday, a record, Bloomberg data show. Cash silver rose 0.2 percent to $40.1150 an ounce. The accord between Merkel and Sarkozy will be presented at the summit in Brussels, according to Merkel spokesman Steffen Seibert. The position, reached after seven hours of talks in Berlin, sent the euro to a one-week high against the dollar. In the U.S., the Obama administration may agree to increase the $14.3 trillion debt limit only if lawmakers need a few days to finish work on a $3.7 trillion deficit-cutting plan, White House spokesman James Carney told reporters. More Scrap Spot gold has risen 13 percent this year, set for an 11th year of gains. The rally has been driven by weakening currencies and record low interest rates as central banks sought to sustain the global economic recovery. “Investment demand is still very strong as there are still many uncertainties in the global economy,” Dick Poon, precious metals trading manager at Heraeus Ltd., said by phone from Hong Kong. “We see a lot more scrap emerging in the market this week, which has offset some of the investment demand, and so we saw some pullback in the price.” Gold will surge to $1,800 by the yearend, and silver will soar to $70 by March as investors seek a haven and Asian demand climbs, Mike Frawley, the global head of metals at Newedge USA LLC, forecast yesterday. “Gold is an excellent hedge in troubled times, Frawley said in an interview in New York. Spot platinum and palladium were little changed at $1,774.75 an ounce and at $795.25 an ounce, respectively. To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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