Gold fell from a record in London on speculation a move by the Swiss central bank to impose a ceiling to the franc’s exchange rate will cut demand for the metal as an alternative to assets including equities. The Swiss franc tumbled after the nation’s central bank set a minimum exchange rate of 1.20 per euro and said it will defend the target with the “utmost determination” if needed. European equities gained after a two-day slump. Ministers from Germany, Finland and the Netherlands will meet today to discuss a Finnish demand for collateral in a bailout for Greece, while the Italian Senate will debate an austerity plan amid a strike. “The cry of ‘risk on’ rippled through a host of markets” after the Swiss announcement, Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group Ltd., wrote today in a report. Still, “in theory a capped Swissie further restricts options for safe havens, which one could argue would be a positive for gold” and any drop in bullion “should be viewed as an opportunity to add to positions, with the factors that supported gold through August still present.” Immediate-delivery gold gained as much as $20.92, or 1.1 percent, to $1,921.15 an ounce and traded down 0.7 percent at $1,887.55 by 10:10 a.m. in London. It fell as much as 2 percent after the Swiss announcement. Gold for December delivery was up 0.8 percent at $1,891.30 on the Comex in New York after touching $1,923.70. Floor trading on the Comex was shut yesterday for Labor Day. Bull Market Bullion is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. The metal is up 33 percent this year, outperforming global stocks, commodities and Treasuries. The metal climbed to a record priced in euros, British pounds and Swiss francs today. The Swiss National Bank said it’s “aiming for a substantial and sustained weakening of the franc,” and “is prepared to buy foreign currency in unlimited quantities.” European equities dropped 4.1 percent yesterday, rounding out their biggest two-day loss since March 2009. Bullion slid as much as 11 percent after setting the previous all-time high on Aug. 23. “Given that gold has recently undergone a correction, followed by a decent consolidation and particularly as European sovereign concerns escalate once again, we feel the ingredients are in place for another impressive gold rally,” Edel Tully, a London-based analyst at UBS AG, wrote in a report. “The recent correction in gold gives investors confidence that a future rally will have a solid foundation.” Losing Momentum Service industries in the U.S. probably expanded in August at the slowest pace in more than a year, showing the recovery is losing momentum, economists said before a report today. The Federal Reserve needs to do more to support the U.S. economy and will probably announce plans to buy long-term Treasuries when policy makers meet Sept. 20 to Sept. 21, Goldman Sachs Group Inc. said in a report. Gold’s rally shows no signs of a “bubble” as central banks continue to boost money supply and as declining equities and weakening currencies will support demand, Marc Faber, publisher of the Gloom, Boom and Doom report, said in an interview yesterday from Chiang Mai, Thailand. Speculative buying had pushed the market into a “bubble that is poised to burst,” Wells Fargo & Co. analysts said in a report last month. Silver for immediate delivery fell 0.7 percent to $42.6387 an ounce. Platinum was down 0.7 percent at $1,875.90 an ounce, set for a second daily close below gold. An ounce of platinum bought 19 ounces of gold on average this year, data compiled by Bloomberg show. Palladium rose 0.3 percent to $766.50 an ounce. To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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