Gold declined for a third day as concern that China’s economy is slowing and European leaders may fail to stem the region’s debt crisis boosted the dollar, damping demand for alternative investments. Silver fell. Spot gold lost as much as 0.5 percent to $1,553.82 an ounce and was at $1,556.45 at 1:51 p.m. in Singapore. It dropped to a one-week low of $1,533.70 yesterday, before trimming losses as data showed demand for new U.S. homes rose more than forecast in April, with sales of previously owned homes rising in every region in the same period. European leaders clashed over joint debt sales at a summit yesterday as new French President Francois Hollande challenged the deficit-cutting orthodoxy. Germany has “huge difficulties� with France’s call for joint borrowing by euro governments, said Chancellor Angela Merkel. That helped drive the dollar to near a 20-month high against a six-currency basket and the euro to close a 22-month low against the greenback today. “Early signs of a U.S. recovery, a slowdown in Chinese growth, question marks over U.S. monetary policy and a sovereign debt crisis brewing in Europe all keep the market in wait-and- see mode,� Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in an e-mail today. “Any of these four catalysts can drive prices and investment demand. The recent price drops underscore the influence of macroeconomics on gold, as the European debt crisis strengthens the U.S. dollar.� China’s manufacturing may shrink for a seventh month in May, a private survey showed today, even as the government said on its website yesterday that it will intensify “fine-tuning� of policies. Premier Wen Jiabao said the country will focus more on bolstering growth in comments published May 20. SPDR Gold June-delivery bullion rose for the first time in four days after dropping by the most in two weeks yesterday on the Comex in New York. It gained as much as 1 percent to $1,563.30 an ounce and last traded at $1,555.20. Holdings in the SPDR Gold Trust, the biggest bullion-backed exchange-traded fund, expanded to 1,268.15 metric tons yesterday, after sliding 17.5 tons on May 22, the biggest such drop since Aug. 24, according to figures on the company’s website. Spot platinum, the best performing precious metal this year, declined for a third day, falling as much as 0.6 percent to $1,416.22 an ounce and last traded at $1,416.75. Prices dropped to $1,406.75 yesterday, the lowest since Jan. 9, sending the platinum-gold ratio to a four-month low of 0.9083. “The outlook for platinum has soured significantly in line with weaker underlying demand from the automotive sector, which is hugely reliant on production and sales of light duty diesels in Europe,� Michael Jansen, an analyst at JPMorgan Chase & Co., wrote in a note yesterday. “The industry is at risk of facing much weaker production into the medium term and this should be influencing pricing perspectives currently.� Platinum Supply Impala Platinum Holdings Ltd. said miners stayed away from work at the world’s largest platinum mine, its Rustenburg operation in South Africa, for a third day as two labor unions clashed. At its Zimbabwean Mimosa mine venture with Aquarius Platinum Ltd., 75,000 tons of ore may be lost because of a May 22 fire. Northam Platinum Ltd. said work at an affected shaft was suspended after a worker died in a fall-of-ground accident at its Zondereinde mine in South Africa on May 22. Cash silver fell for a fourth day, losing as much as 0.4 percent to $27.6825 an ounce and was last at $27.7375, after gaining 0.5 percent earlier. Palladium also declined for a fourth day, falling 0.4 percent to $590.38 an ounce, after dropping to $587 yesterday, the lowest price since Nov. 30. 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