By Frank Tang and Jan Harvey NEW YORK/LONDON | Thu Sep 15, 2011 1:03pm EDT
(Reuters) – Gold fell 2 percent to three-week lows on Thursday, as efforts by global central banks and top European powers to end the region’s debt crisis prompted investors to dump safe havens.
Bullion prices tumbled and riskier assets such as equities rallied after major central banks around the world said they would cooperate to offer three-month U.S. dollar loans to commercial banks to prevent money markets from freezing up.
A bearish double-top chart pattern also accelerated technical selling as prices slid below $1,800 an ounce. Gold has lost 7 percent since hitting a record $1,920.30 an ounce on Tuesday last week.
“If we are not able to get above the all-time high, by definition the double top remains in place. In the short term, it’s definitely going to be technical pressure,” said Adam Sarhan, CEO of New York-based Sarhan Capital.
Spot gold was down 2.1 percent at $1,781.90 an ounce by noon EDT, having dipped as low as $1,772.04. The precious metal is set for its second straight weekly loss, which would be its first two-week drop since early July.
U.S. gold futures for December fell $41.60 to $1,784.40 an ounce in heavy trade.
Silver lost 2.5 percent at $39.66 an ounce.
Equities and the euro rose after the coordinated actions by central banks eased any funding crunch created by Europe’s sovereign debt crisis. European bank
“People don’t feel any more confident about the outlook for Europe, but obviously, there must be a bit more positivity for holding riskier assets,” Societe Generale analyst David Wilson said.
Gold dropped as German government bond futures staged their largest one-day fall in six months on signs of more willingness from policymakers to solve Greece’s debt crisis, prompting some to sell positions in safe-haven bonds. <GVD/EUR> French and German leaders told Greece on Wednesday it was vital to implement reforms set under a bailout plan. Patience is wearing thin among euro zone members with Greece’s failure to meet fiscal and structural reform targets.
The latest U.S. data showed an above-forecast rise in weekly U.S. jobless claims, and August inflation cooling, along with a surprisingly large contraction in a reading of regional manufacturing, highlighting weakness in the U.S. economy.
HSBC, GFMS FORECAST $2,000 GOLD
UBS analyst Edel Tully said in a note that the U.S. Federal Reserve policy meeting next week could provide fresh impetus to the gold market.
HSBC and metals consultancy GFMS said on Thursday they see gold rising above $2,000 an ounce, citing high government debt levels and instability in the currency markets.
GFMS, a unit of Thomson Reuters, said it expected gold to break through $2,000 an ounce by year-end, as recovering investment added to already strong bar, jewelry and official sector buying.
Spot platinum was down 1.4 percent at $1,782.50 an ounce, and spot palladium was up 0.1 percent at $716.50 an ounce.