July 1 (Bloomberg) -- Gold, little changed in London today, may extend its best quarterly advance since the end of 2007 as concern over the economic recovery spurs demand for bullion as a means of protecting wealth. European equities dropped for a third day after China’s manufacturing growth slowed and Moody’s Investors Service said it may cut Spain’s top credit rating. Gold climbed 12 percent the previous three months, the seventh straight quarterly gain and the longest winning streak since 1979. “Given the current concerns over inflation, slowing economic recovery and European debt the metal may look to extend higher as investors continue to diversify from fiat currencies,” said James Moore, an analyst at TheBullionDesk.com in London. Gold for immediate delivery lost 18 cents to $1,242.07 an ounce at 9:31 a.m. in London. Prices added 2.1 percent last month. The metal for August delivery was 0.3 percent lower at $1,242.70 on the Comex in New York. Bullion has climbed 13 percent this year, reaching a record $1,265.30 an ounce on June 21, as investors sought to protect their wealth from prolonged financial turbulence in Europe and on concern the global recovery may slow. The MSCI World Index of equities slipped 11 percent this year and the euro declined 14 percent against the dollar. “Deteriorating” growth prospects and challenges in meeting fiscal targets mean Spain’s top classification may be lowered by as much as two grades, Moody’s analysts said yesterday. The review will be concluded within three months, the ratings company said. “For the time being, gold looks likely to remain in demand as a safe haven,” Eugen Weinberg, head of commodity research at Commerzbank AG, wrote in a report yesterday. Still, that trend may be countered by weak seasonal demand for gold from India, the largest importer, Weinberg said. Purchases by India may tumble by as much as 36 percent this year as higher prices and volatility slow demand, the Indian Bullion Market Association said. Imports may be about 350 tons to 400 metric tons in the year ending March 31, 2011, compared with about 550 tons a year earlier, the association’s President Anjani Sinha said yesterday in an interview in Mumbai. Imports are down by about half in the last three to four months, he said. Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged at a record 1,320.44 metric tons yesterday, according to the company’s website. Global holdings of the metal by ETFs were little changed at an all-time high 2,067.8 tons yesterday, according to Bloomberg data from 10 providers. Silver for immediate delivery in London lost 0.3 percent to $18.56 an ounce. The metal gained 6.5 percent the previous three months for a sixth straight quarterly advance, the best streak since the beginning of 1980. Platinum was 1.1 percent lower at $1,516.88 an ounce, and palladium was down 0.2 percent at $441.45 an ounce.

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