Gold falls in Europe

Gold shed more than 1 percent on Tuesday, set for a third successive daily fall to its lowest in two weeks as mounting concern over Ireland's ability to repay its debt pushed the euro to six-week lows against the dollar. While gold often benefits from heightened investor aversion to riskier assets, it can often be caught up in a torrent of liquidation as investors seek to plug losses elsewhere in their portfolios.
This was the case in October 2008, following the collapse of Lehman Brothers, which prompted a 17 percent drop in the S&P 500 and a 16.6 percent fall in gold that month. Spot gold fell to a session low of $1,339.70 an ounce, recovering some poise to trade at $1,341.04 an ounce by 1615 GMT, down from $1,360.09 the day before. US gold futures fell 2.0 percent to $1,341.10 an ounce.
"Gold is a risk asset, we saw that post-Lehman Brothers, when everyone thought gold would benefit and it sold off," said Credit Agricole analyst Robin Bhar. "People would liquidate, given that they've probably secured good profits in the gold market ... and have taken some money off the table," he said.
Gold, which is still up 24 percent so far this year, has lost about 4 percent over the last week in the broad sell-off that has knocked copper, crude oil and grains, which have in turned suffered from mounting expectations for more monetary tightening in top raw materials consumer China.
Coupled with flows out of hard assets was a cooling towards bullion from some of the world's best-known gold bulls. The most recent quarterly securities filings showed George Soros cut his exposure to gold in the last quarter, along with Eric Mindich. "Commodities generally are on the back foot at the moment ... everything feels a bit on hold. We've had a pretty volatile period over the last couple of weeks and things seem to have blown themselves out for the time being," said Scotia Moccatta head of precious metals Simon Weeks.
"Gold is wrapped up in the commodities story, which is often the case in the short term and then it often recovers as a currency afterwards." Ireland came under intense pressure on Tuesday to request aid over its debt crunch in what the European Council's president called a "survival crisis" for the eurozone and the wider European Union.
The euro briefly turned negative against the dollar before creeping higher for a 0.2 percent gain on the day after data showed a sharp rise in capital inflows into the United States in September and a separate report showed a surprise fall in wholesale inflation.
Yet several analysts echoed the view that the current decline in gold prices would likely be temporary. "Pressure on interest rates has in our view been one of the key drivers behind the latest precious metals rally," said Credit Suisse in a note. "However, we view the current pullback across the sector as temporary as we expect the fundamental backdrop to remain favourable."
Gold priced in euros fell by nearly 1 percent on the day, as did gold priced in yen while the gold price in Swiss francs and sterling was down between 0.4 and 0.6 percent. Spot silver was last at $25.18 an ounce, down by nearly 1 percent from $25.42 the day before, having risen earlier to a session peak at $25.85.
Platinum and palladium were both down on the day, in line with other industrial commodities, shrugging off a bullish outlook for the market next year from refiner Johnson Matthey, which said improving supply and demand fundamentals should bring both markets broadly into balance next year. Platinum fell to $1,639.24 an ounce, down 1.8 percent on the day. Palladium was down 3.7 percent at $644.47, in its third successive daily decline.