Gold may drop for the first time in four days, paring its best weekly performance in six, as a rally to a three-week high prompts sales before data that may show the U.S. economy expanded at the slowest pace in a year. Spot gold was little changed at $1,616.32 an ounce at 12:50 p.m. in Singapore, after earlier falling 0.2 percent. The metal climbed to $1,622 yesterday, the highest level since July 5. Bullion is up 2 percent this week, the most since the five days to June 15, as European Central Bank President Mario Draghi pledged to preserve the euro and on speculation Europe’s rescue fund may get a banking license to help ease the region’s crisis. “The environment is slowly changing: We’ve got make it or break it strategies in the euro and we’ve got the prospect for more stimulus in the U.S.,� said Jonathan Barratt, chief executive officer of Barratt’s Bulletin, a commodity-markets newsletter in Sydney. “You start to get a sense that perhaps more money’s going to be printed and as a result of that, I think gold will come back into favor.� Draghi suggested policy makers may intervene in bond markets as surging borrowing costs in Spain and Italy threaten the existence of the currency bloc, sending the euro to a two week high against the dollar. The common currency is set for its first weekly gain in a month versus the greenback. December-delivery bullion was little changed at $1,619.90 an ounce on the Comex in New York. Fifteen of 30 traders and analysts surveyed by Bloomberg expect gold to climb next week and six were neutral. Holdings in bullion-backed exchange-traded products are about 0.7 percent below the record 2,413.6 tons set July 5, data compiled by Bloomberg show. U.S. Economy U.S. gross domestic product probably expanded at a 1.4 percent annual rate in the second quarter, after a 1.9 percent gain in the prior three months, according to the median forecast of economists in a Bloomberg survey. Data yesterday showed contracts to purchase previously owned homes unexpectedly dropped in June for the second time in the last three months, while orders excluding transport fell the most in five months. Cash gold almost doubled from December 2008 to June 2011 after the Federal Reserve bought $2.3 trillion of bonds in two rounds of so-called quantitative easing to boost the economy. Last month, the U.S. central bank expanded a program of replacing short-term bonds in its portfolio with longer-term debt. The Federal Open Market Committee next meets on July 31 and Aug. 1. Gold may reach $3,000 an ounce in the next two years as governments pursue economic stimulus programs, said Sean Boyd Chief Executive Officer of Canadian mining company Agnico-Eagle Mines Ltd. Debasement of paper currencies will be reflected in a higher gold price, Boyd said in a July 25 interview. Spot silver was little changed at $27.5275 an ounce, up 0.8 percent this week for its best weekly showing in a month. Cash platinum rose for a third day, gaining as much as 0.5 percent to $1,412.25 an ounce. It was last at $1,410.25, set for a fourth weekly decline. Palladium advanced for a third day, adding as much as 0.7 percent to $574.25 an ounce. It last traded at $572.25, paring a second weekly drop. 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

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