Gold may decline in London as Greece default risk eases

Gold may decline for the first time in three days in London as reduced risk of an immediate Greek default curbs demand for the metal as a protection of wealth. Greek Prime Minister George Papandreou garnered enough votes for his ¤78 billion (Dh415.9 billion) package of budget cuts and state-asset sales. The metal is trading 4.2 per cent below a record set at the beginning of last month and is heading for an 11th straight quarterly gain. \"With the sovereign premium lifted, gold needs to find new drivers if it is to regain its highs,\" Edel Tully, a London-based analyst at UBS AG, said in a report. Still, prices are, \"unlikely to fall far. Article continues below This is because anyone who wanted to sell gold is likely to have done so in the second half of last week.\" Immediate delivery gold fell $1.08, or 0.1 per cent, to $1,511.22 an ounce by 11.30am in London. The metal is up 5.5 per cent since March 31. Gold for August delivery was up 0.1 per cent at $1,511.70 an ounce on the Comex in New York. Bullion gained to $1,508 an ounce in the morning ‘fixing\' in London, used by some mining companies to sell output, from $1,504.25 at yesterday\'s afternoon fixing. Five-week low Gold is up 6.4 per cent in 2011 after climbing the past ten years, the longest run of gains in at least nine decades. Europe\'s debt crisis helped bullion reach a record $1,577.57 on May 2. Prices declined as much as 4.3 per cent from last week\'s highest level to touch a five-week low of $1,490.85 on June 27. Luxembourg\'s Jean-Claude Juncker, who leads a group of euro-area finance ministers, said the Greek parliament\'s decision paves the way for the payment of the next aid installment from euro-area governments and the International Monetary Fund. Papandreou\'s win in the his country\'s second ballot will allow him to execute measures ranging from tax increases to asset sales. European Central Bank President Jean-Claude Trichet said on June 28 that policy makers are in, \"strong vigilance mode,\" ahead of a meeting next week, supporting expectations for an interest-rate increase. The ECB raised its benchmark rate in April for the first time in almost three years, lifting it by a quarter point to 1.25 per cent. The US Federal Reserve\'s second round of quantitative easing concludes today. The Fed plans to buy between $4 billion and $5 billion of notes due from December 2016 to June 2018. The purchases will be the last in the central bank\'s effort to add $600 billion to the economy, according to its website. Reduces reserves Mexico reduced its gold reserves by 0.18 metric tonne to 105.95 tonnes in May, according to data on the IMF\'s website. Silver for immediate delivery rose 0.4 per cent to $35.04 an ounce in London. It is down seven per cent since March 31, heading for the first quarterly decline since 2008. The metal has risen 13 per cent this year. Palladium gained 0.9 per cent to $757.75 an ounce and has fallen 0.8 per cent this quarter, and 5.5 per cent this year. Platinum was little changed at $1,723.50 an ounce. The metal is down 2.5 per cent this quarter, and 2.6 per cent in the year so far.