Gold falls in Europe

Gold slipped 2.5 percent in Europe on Tuesday on technical selling, with traders disappointed over the metal's failure to sustain its rally to a near four-week high in the previous session. Losses in gold pressured other precious metals, with platinum and palladium both down more than 5 percent at their session lows and silver off more than 4 percent.
Spot gold was bid at $889.80 an ounce at 1525 GMT, against $906.75 an ounce late in New York on Monday. Earlier it touched a low of $883.70. US gold futures for June delivery on the COMEX division of the New York Mercantile Exchange fell $17.30 to $890.10 an ounce.
The precious metal made good gains on Monday as equity markets slipped, due partly to fears a swine flu outbreak could hurt the economy, and on hopes China would continue to buy gold. But its failure to sustain those gains through technical resistance at $918.50 an ounce, identified by analysts who study charts of past price movements, sparked selling.
Gerry Schubert, director of precious metals at Fortis Bank, said gold's sharp move lower overnight had set a downward trend in the market, and that the opening of New York trading had seen a spate of technical selling and weak long liquidation. "In the last two days, we are down $30, and that is too much for you not to have to react if you are a technical trader and long," he said.
The boost provided by news that China has hiked its gold reserves by three-quarters since 2003 has largely petered out, traders said. Nout Wellink, a member of the governing council of the European Central Bank, said China's move to diversify reserves was positive, but unsurprising.
Gold and gold receivables held by euro zone central banks fell sharply in the week to April 24, down 823 million euros, the ECB said separately. Gold typically tracks oil prices, which are a key driver of inflation, against which the metal is often bought as a hedge.
Traders are awaiting fresh direction from the outcome of a two-day meeting of the US Federal Open Market Committee. "The FOMC meeting will be closely monitored on Wednesday and any more statements on quantitative easing would help to limit losses in the precious metal," VTB Capital said in a note.
Among other precious metals, spot platinum fell more than 6 percent to a low of $1,066.50, and was later at $1,077.50 an ounce against $1,139. Palladium, meanwhile, touched a low of $210.50, down 5.6 percent, and was later bid at $213.50 an ounce against $223. The metals, mainly used in autocatalyst manufacturing, have suffered from a decline in the car industry over the last year.
More bad news for carmakers emerged on Monday as General Motors offered its final reorganisation plan by slashing bond debt, cutting over 21,000 more US jobs and emerging as a nationalised carmaker under the control of the US government. Platinum is also being pressured by weakness in other precious metals. Silver was bid at $12.38 an ounce against $12.89.