Gold declined to a six-week low in New York as Greece progressed in staving off a default, curbing demand for the metal as a protection of wealth.
Greece may receive as much as €85 billion (Dh452 billion) in new financing, including a contribution from private investors, in a second bailout aimed at preventing default and ending the Eurozone's debt crisis, according to an Austrian Finance Ministry official. Gold has dropped 5.5 per cent since reaching a record at the beginning of May.
"There could be scope for further pressure in the short term" for gold, James Moore, an analyst at TheBullionDesk.com in London, said yesterday in a report. The agreement of austerity measures in Greece is "likely to trigger an increase in risk appetite. In addition, gold is entering what is traditionally a slow period for physical demand."
Gold for August delivery fell as much as $16.80 (Dh61.70), or 1.1 per cent, to $1,486 an ounce, the lowest level since May 19, and traded at $1,490.30 on the Comex in New York. Prices are down 0.7 per cent this week after climbing for an 11th straight quarter. Immediate-delivery gold was 0.7 per cent lower at $1,489.61 in London.
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Gold is up 4.8 per cent in 2011 after climbing the past ten years, the longest run of gains in at least nine decades in London. Europe's debt crisis helped bullion reach a record $1,577.40 on May 2. Greek Prime Minister George Papandreou secured passage on Thursday of €78 billion of additional budget cuts and revenue measures needed to meet the targets of the original bailout.