AAP
Gold fell for a third consecutive session,
moving once again in tandem with riskier assets, as jittery investors
sold on a lack of progress over euro zone debt talks and an uncertain US
economic outlook.
Bullion tracked Wall Street lower after French
President Nicolas Sarkozy said plans to tackle Europe's debt crisis
have stalled with Paris and Berlin at odds over how to increase the
firepower of the region's bailout fund. Moody's downgradeon Spain's
sovereign credit rating also weighed.
Disappointment over the Federal Reserve's
beige book - a survey of national business conditions - sent gold,
stocks and commodities broadly lower. Gold slumped more than two per
cent in the last three sessions, having briefly broken its unusual
positive correlation with riskier assets on the previous day.
"The general consensus is that there is little
in the beige book that would fire up hopes of QE3, and coupled with the
no real resolution in Europe, investors are liquidating their
positions," said Frank McGhee, head precious metals trader of Integrated
Brokerage Services LLC in Chicago.
Spot gold was down 0.9 per cent at $US1,642.99 an ounce by 2.45pm EDT (0545 Thursday AEDT).
US December gold futures settled down $US5.80
at $US1,647 an ounce. Trading volume was around half of its 30-day norm
after higher-than-usual turnover during Tuesday's decline.
Spot silver was down three per cent at $US31.06 an ounce.
In afternoon trading, selling accelerated
across asset classes after the Fed's beige book showed that the US
economic outlook grew dimmer in September, leading businesses to be wary
of spending and of building up inventories ahead of the holiday sales
season.
Gold's inflation-hedge appeal dimmed after a
report earlier showed US core consumer prices rose at their slowest pace
in six months in September. Traders also cited worries that the US
futures regulator will pushed through its toughest measures to curtail
speculation in commodities.
Bullion investors now look forward to possible
details of plans to contain the nearly two-year-old euro zone debt
crisis at a summit of European leaders on Sunday.
The backdrop of Greek police clashing with
demonstrators as workers began their biggest strike in years in protest
at cuts demanded of their country in return for help raised market
nervousness.
"The traders for the most part want to hear
what concrete action the European Union plans on taking to resolve its
woes before they add to current positions," said Miguel Perez-Santalla,
vice president at Heraeus Precious Metals Management.
"It looks like we are in wait-and-seek mode for now," he said.
Gold, traditionally a safe-haven investment,
rebounded from its lows following September's near-11 per cent decline,
yet analysts said bullion's usual inverse correlation to riskier assets
has eroded, making it less likely to act as a safe-haven in times of
market turmoil.
Technical analysts said that a bearish
double-top, based on the two recent highs formed in late August and
early September would continue to weigh down on the metal's near-term
outlook.
Palladium dropped 2.8 per cent at $US600.68 and platinum declined 1.1 per cent at $US1,510.74.
