Gold falls in London

Gold was set for its biggest one-day fall in three months on Monday, under pressure from a robust dollar, which in turn choked off demand from consumers in key regions such as India. Last week's summit of European Union leaders yielded a historic agreement on beefing up fiscal discipline in the 27-member bloc, but fell short of market expectations for a more drastic solution to the crisis.
This lack of confidence in Europe pushed investors into the relative safety of the US dollar, rather than gold, which has fallen by about 5 percent in the last week alone. A stronger dollar often encourages non-US holders of gold to sell the metal to lock in a higher profit in their own currencies and in India, the world's largest consumer of bullion, this has kept jewellers and other consumers at bay.
Spot gold was last quoted down nearly 3 percent at $1,659.66 an ounce by 1508 GMT, having dropped by as much as 2.8 percent earlier to a low at $1,662.39, its lowest in three weeks, after breaking through $1,680.00, a major support line. Afshin Nabavi, head of trading at MKS Finance, said the run-up to the end of the year was encouraging some selling of gold to raise dollars.
"The dollar is strengthening and the euro is losing value and ... because of what is happening in India with the (weaker) rupee, the demand for physical gold is not as it should be," he said." "Now we have broken the $1,675 region, so now the next really important support ... is $1,650, that is where it held last time. Until the year-end we are probably going to be very choppy and probably trading on the lower side, rather than the higher," Nabavi added.
There is continued evidence of investor demand for gold elsewhere, as highlighted by the rise in speculative holdings of gold futures, which last week rose by half a million ounces and by the swell in holdings of gold in exchange-traded fund products to record highs last week.
In the last month, holdings at the largest gold-backed exchange-traded products have risen by nearly 1.2 million ounces, largely in response to concern over the slow progress in solving the eurozone debt crisis. "Three or four months ago, people were pretty sure gold would end the year close to $2,000 or at least have a pop there and now that is looking unlikely with funding stresses and money market stresses and the dash for cash," Credit Agricole analyst Robin Bhar said.
"That is obviously dealing a blow to gold ... the next couple of days are going to be crucial technically for gold. Last week we were up at $1,760 and we have now lost $80 fairly quickly, that shows that rallies are difficult to sustain in this sort of environment."
Prices of platinum group metals also weakened. Spot palladium fell 3.6 percent to $658.72 an ounce, while platinum fell 1.9 percent to $1,483.49 an ounce. Northam Platinum, one of South Africa's smaller platinum producers, said on Monday it was enduring frequent safety stoppages at its only producing mine where surprise government inspections were taking place.
Demand for industrial metals will largely hinge on the growth in China, the world's second-largest economy and top consumer for many raw materials. Slower growth in China's exports and imports in November showed fresh evidence of faltering demand abroad and at home. Silver, used in electronics, chemical and electrical applications, fell 3.4 percent to $31.12 an ounce. So far this month, the price has fallen by more than 4 percent, set for a second consecutive monthly decline.