Dec. 5 (Bloomberg) -- Gold fell the most in two weeks as European leaders worked to resolve the region’s sovereign-debt crisis, reducing demand for the metal as an alternative asset. Palladium capped the longest rally since April.
German Chancellor Angela Merkel met with French President Nicolas Sarkozy today in Paris to advance proposals for stricter enforcement of the region’s budget-deficit rules, which they will present to the region’s leaders at a summit in Brussels on Dec. 9. The plan will “consume market attention this week,” UBS AG analyst Edel Tully wrote today in a report.
“There is a renewed wave of optimism in the market that European policy makers are closer to finding a workable solution to stop the bleeding over the short term,” Scott Gardner, the chief investment officer at Verdmont Capital SA in Panama, said in an e-mail. “We are seeing a rotation out of gold into more cyclically exposed segments of the commodity market.”
Gold futures for February delivery dropped 1 percent to settle at $1,734.50 an ounce at 1:46 p.m. on the Comex in New York. The drop was the biggest since Nov. 21. The metal gained 3.7 percent last week.
Palladium futures for March delivery rose 0.1 percent to $646.50 an ounce on the New York Mercantile Exchange. Prices have gained for six straight sessions, the longest rally since April 5.
Italian Prime Minister Mario Monti will present a 30 billion-euro ($40 billion) austerity package to parliament after his Cabinet approved the plan yesterday, driving stocks and crude oil higher today. Italy’s measures include more than 12 billion euros in spending cuts aimed at reducing the euro region’s second-biggest debt.
Silver futures for March delivery fell 1 percent to $32.372 an ounce on the Comex, a third straight decline. The metal climbed 5.1 percent last week.
Platinum futures for January delivery slipped 1 percent to $1,532.50 an ounce on the Nymex.
--With assistance from John Dawson in Hong Kong. Editors: Millie Munshi, Daniel Enoch
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