Gold declined after a rally to an all-time high prompted some investors to reduce their holdings even amid persistent concern that the global recovery may be losing momentum. Immediate-delivery gold, which reached a record $1,661.95 an ounce yesterday, lost as much as 0.6 percent to $1,651.95 and was at $1,656.66 as of 11:32 a.m. in Singapore. The metal’s so- called relative-strength index reached 75 yesterday, above the 70-point level that’s seen by some analysts as signalling a drop. Gold rallied 2.6 percent yesterday, the most in nine months, after a report showed U.S. consumer spending declined in June, raising concern a slump in jobs-creation is hurting growth. The metal has risen more than 10 percent in the past month as U.S. lawmakers battled to head off a default by raising the debt ceiling. “The U.S. debt problem has been settled for now and problems in Europe have resurfaced, which will keep gold’s uptrend intact,” Hou Shufeng, an analyst at China Merchants Futures Co., said from Shenzhen. “After such a big jump in prices yesterday, a little bit of profit taking is to be expected.” The December-delivery contract in New York gained 0.9 percent to $1,658.80 an ounce after reaching a record $1,664.50 yesterday. Futures have rallied 16 percent this year, driven by increased investment demand and buying by central banks. Holdings in exchange-traded products expanded to 2,173.923 metric tons yesterday, the highest level ever, Bloomberg data show. The assets, which totaled 2,097.231 tons on Dec. 31, have climbed for seven straight sessions. Thailand, South Korea and Kazakhstan added gold valued at about $2.4 billion to their reserves last month, joining Mexico and Russia in increasing holdings this year as central bankers hedge against depreciating foreign-currency reserves. Debt Problems “The U.S. economy isn’t doing well and the European debt problem is a long-term problem, which should drive prices to $1,800 by the end of the year,” said Hou. The Labor Department may say on Aug. 5 that U.S. employers added 85,000 jobs in July, compared with 18,000 in June, a Bloomberg News survey showed. Moody’s Investors Service and Fitch Ratings affirmed their AAA credit ratings for the U.S. while warning that the ratings could be downgraded if lawmakers fail to enact debt reduction measures and the economy weakens. In Europe, ten-year bond yields for Spain and Italy reached euro-era records yesterday on concern that rising debt-servicing costs may wipe out the benefits of austerity measures, prompting Spanish Prime Minister Jose Luis Rodriguez Zapatero to delay a planned vacation. His Italian counterpart Silvio Berlusconi is scheduled to give a national televised speech today. Gold advanced to all-time highs of 1,171.137 euros an ounce, 1,020.156 pounds an ounce and C$1,597.183 an ounce today. Spot gold and gold futures in Shanghai also touched records. Cash silver was unchanged at $40.80 an ounce. Palladium gained 0.2 percent to $828 an ounce, while spot platinum was little changed at $1,794.50 an ounce. 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

Source