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Gold declined in New York as signs that the global economic recovery is taking root curbed investor demand for the metal as a means of protecting wealth and as yesterday’s gain dampened physical purchases.

Gold yesterday rose 1.2 percent, the most in more than three weeks. Singapore’s government today raised the forecast for full-year economic growth to as much as 15 percent, while Intel Corp. reported record second-quarter sales and topped analysts’ estimates with its forecast for the coming period. Asian shares gained and U.S. index futures rose. European stocks were down 0.5 percent after a six-day rally.

Improving economic data and news “limits gold prices to trade higher,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. “Above $1,200 an ounce physical buyers are not attracted. Gold is certainly in a consolidation phase.”

Gold futures for August delivery lost $7, or 0.6 percent, to $1,206.50 an ounce at 8:22 a.m. on the Comex in New York. Gold for immediate delivery in London was 0.5 percent lower at $1,206.73 an ounce.

Bullion fell to $1,212.25 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,216 at yesterday’s afternoon fixing.

Singapore’s economy expanded at a 26 percent annual pace in the second quarter after a record surge in the previous three months, the trade ministry said today. The nation’s growth has already prompted the central bank to allow the currency to strengthen in order to temper inflationary pressures. The Singapore dollar is used instead of interest rates to conduct monetary policy in Southeast Asia’s fourth-largest economy.

Haven Demand ‘Withering’

“Clearly, safe-haven demand for gold is withering as evidence of an economic rebound emerges,” said Park Jong Beom, Seoul-based senior trader with Tongyang Futures Co. “Still, gold is likely to be supported above $1,200 level due to the dollar’s weakness.”

The dollar was 0.2 percent higher against the euro after yesterday slipping to the lowest level in two months. Gold typically moves inversely to the U.S. currency.

Gold is up 10 percent this year and is set for a 10th straight annual increase, the longest run of gains since at least 1920. Futures reached a record $1,266.50 on June 21 as investors sought to protect their wealth against the crisis in Greece and other European nations struggling to repay debt, and on concern that the global recovery may slow.

‘Signal a Pause’

Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, were unchanged at 1,314.82 metric tons yesterday, according to the company’s website. Global holdings of the metal by ETFs rose 1.1 tons to a record 2,076.16 tons yesterday, according to Bloomberg data from 10 providers.

Increasing holdings “could signal a pause in gold’s long liquidation when speculators rushed to book profits in their gold ETFs,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. Gold prices were unchanged last week after two weeks of declines.

Silver for September delivery in New York fell 0.3 percent to $18.195 an ounce. Platinum for October delivery declined 0.5 percent to $1,528.20 an ounce. Palladium for September delivery slipped 0.8 percent to $465.50 an ounce.

source : Bloomberg.com

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