By Kim Kyoungwha May 19 (Bloomberg) -- Gold tumbled to the lowest level in a week as the metal’s recent rally prompted some investors to lock in gains. Palladium slid to the weakest level in two weeks. Bullion for immediate delivery slid as much as 1.5 percent to $1,206.75, the lowest level since May 11, before trading at $1,209.50 at 1:02 p.m. in Singapore. June-delivery futures in New York dropped 0.5 percent to $1,209.10. “Some investors are taking profits on recent gains, which is exerting a little pressure on the gold market,” said Park Jong Beom, a trader with Tongyang Futures Co. in Seoul. “Psychologically, gold still remains attractive as European fiscal woes have yet to ease.” The euro fell to the lowest level since 2006 after Germany’s ban on naked short-selling triggered concern that Europe’s debt crisis will worsen. The 16-nation single currency fell as low as $1.2144, the weakest level since April 17, 2006. Gold has gained 10 percent this year, touching an all-time high of $1,249.40 an ounce on May 14, amid Europe’s sovereign- debt crisis, while the euro slumped 15 percent against the dollar. Assets in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, added 3.04 metric tons to a record 1,217.11 tons this week, the company’s website showed. “We foresee weakness in gold and gains will be capped,” Wong Eng Soon, Singapore-based analyst with Phillip Futures Ltd., wrote in a report today. “It seems that the rally has stalled for the time being. We see indecision in the market and bears are gaining strength.” More Gains Still, gold will target $1,350 region once the record price has been surpassed, said Karen Jones, technical analyst with Commerzbank AG, citing Fibonacci extension of the February- to-March advance. Support should be between $1,214.35 an ounce and $1,187.95, Jones wrote in a report yesterday. Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low. “The current uncertainty over the fiscal situation in Europe reinforces our medium-term view that gold could rise above $1,500 an ounce,” Michael Widmer, London-based metals strategist with Bank of America Merrill Lynch, wrote in a report. Palladium weakened to the lowest level since May 5 and platinum and silver also tumbled as industrial metals extended their slump on concern that Europe’s debt crisis may worsen, reducing demand for raw materials. Palladium and platinum are used auto exhaust catalysts. Palladium slumped 2.6 percent to $486 an ounce, silver dropped 2.1 percent to $18.6425 an ounce and platinum decreased 1.4 percent to $1,650.30 an ounce. --Editor: Matthew Oakley. To contact the reporters on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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