Dec. 6 (Bloomberg) -- Gold prices fell for the second straight day as purchases ebbed in India, the world’s biggest consumer of the metal, and investors awaited a European Union summit on the region’s debt woes.
Last week, demand in India slumped 53 percent from a week earlier, according to UBS AG. Standard & Poor’s yesterday said it may cut the credit ratings of 15 countries that use the euro, pending the outcome of the summit that starts Dec. 8 in Brussels. Gold futures pared losses of as much as 1.7 percent.
“Given the heavy headline risk and the lingering doubt that politicians will deliver a conclusive solution to the euro- zone crisis, participants feel safer on the sidelines,” Edel Tully, an analyst at UBS in London, said in a report.
Gold futures for February delivery fell 0.2 percent to settle at $1,731.80 an ounce at 1:46 p.m. on the Comex in New York. The metal dropped 1 percent yesterday. The price has climbed 22 percent this year, heading for the 11th straight annual gain.
Physical demand “may not materialize unless gold sees a bigger correction to $1,680,” Tully said.
European Central Bank President Mario Draghi will probably cut interest rates by 0.25 percentage point, according to economists in a Bloomberg survey. Draghi signaled last week that the bank may step up its efforts if euro-area governments forge a closer fiscal union.
“It’s almost a certainty that they are going to cut rates, but the bigger drama takes place at the end of the week” with the European summit, Adam Klopfenstein, a market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “Gold is waiting, like every other asset class, to see what Europe will do.”
Futures jumped 3.6 percent in three days after the ECB cut rates by 0.25 percentage point on Nov. 3. Holdings in gold- backed exchange-traded products fell yesterday for the third straight session.
Silver futures for March delivery rose 1.1 percent to $32.744 an ounce on the Comex, ending a three-session slump. The metal has climbed 5.8 percent this year.
--With assistance from Glenys Sim in Singapore. Editors: Patrick McKiernan, Steve Stroth
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