Gold may fall for a third day in London as some investors sell the metal to cover losses in equities that dropped on concerns that the European debt crisis is escalating. Gold, which reached a record $1,921.15 an ounce on Sept. 6, tumbled 2.9 percent in the past two days as equities tumbled and as the dollar touched a six-month high against six major currencies. European stocks extended a two-year low today and the euro fell toward its weakest level since 2001 against the yen amid mounting concern that Greece will default. “There’s weakness in the euro and a drop in risky assets,” Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said by phone today. “People are also moving out of gold to cover losses in assets like equities. Over the medium term gold still has the potential to move higher.” Immediate-delivery gold fell $3.33, or 0.2 percent, to $1,811.97 an ounce by 9:31 a.m. in London after earlier today sliding to $1,796.10. Gold for December delivery was little changed at $1,812.80 on the Comex in New York. 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 28 percent this year, outperforming global stocks, commodities and Treasuries. Greece’s perceived chance of default in the next five years has soared to 98 percent, based on a standard pricing model of credit-default swaps, as Prime Minister George Papandreou fails to reassure international investors that his country can survive the euro-region crisis. Merkel Comments German Chancellor Angela Merkel said in an interview with rbb-Inforadio today she won’t let Greece fall into “uncontrolled insolvency” because the risk of contagion for the other euro-zone countries “is very big.” “If the U.S. dollar continues to strengthen because of what’s happening out of Europe, it could weigh on gold prices and gold could head below $1,800 an ounce,” Vasu Menon, vice- president of wealth management at Oversea-Chinese Banking Corp., said in a Bloomberg Television interview. “On that kind of dip it presents an even more attractive buying opportunity because the long-term prospects of gold are very promising.” Gold exchange-traded-product holdings were little changed at 2,149.8 metric tons yesterday, data compiled by Bloomberg show. Assets reached a record 2,216.8 tons on Aug. 8. Silver for immediate delivery rose 0.4 percent to $40.45 an ounce. Platinum was up 0.2 percent at $1,811.45 an ounce. Palladium gained 0.9 percent to $713.75 an ounce. The metal is trading close to parity with gold. An ounce of platinum bought 1.19 ounces of gold on average this year, down from 1.32 ounces in 2010. The ratio last month fell to the lowest level in almost two decades. To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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