Gold dips in London

Gold turned lower on Wednesday in line with a dip in the euro from the day's highs and a decline in stock markets, as initial enthusiasm over the International Monetary Fund's plan to boost lending to struggling euro zone nations evaporated.
Spot gold was down 0.3 percent at $1,645.84 an ounce at 1447 GMT, off a high of $1,659.21 an ounce, while US gold futures for February delivery eased $8.00 an ounce to $1,647.60. The euro pared gains versus the dollar as the rally sparked by the IMF plan and a Fitch's comment that the ratings agency did not expect Italy to default ran out of steam. Traders are awaiting the outcome of talks between Greece and its creditors, as they go head to head on Wednesday amid rising optimism the country can hammer out a bond swap deal to stave off a painful default.
"If you can move towards a long-term solution in Europe, then that is negative for gold," said Natixis analyst Nic Brown. Gold has risen 5.9 percent so far this year, but has struggled to maintain upward momentum after confidence in the metal was battered by a 10 percent price fall last month. The metal has managed to climb in January even at times when the euro has softened, but its strength relative to the dollar has tended to have a positive effect on the metal.
China's gold purchases slowed down ahead of the Lunar New Year holiday, while India's bullion traders held off placing fresh orders after an increase in gold import duty was announced earlier this week. India's government raised gold import duty to 2 percent of value from the previous flat rate of 300 rupees per 10 grams. UBS said in a note that while the impact of the increase would probably be muted in the short term, "the reaction to this new floating tax rate is likely to be delayed". "The full impact will be observed once internal stocks (with the old import tax) become depleted and new consignments are shipped in," it said.
On the supply side of the market, the world's number four gold miner, Gold Fields, said its fourth-quarter production was down nearly 2 percent, and full-year output was down at 3.49 million ounces. Meanwhile, African Barrick Gold, a unit of the world's largest producer Barrick Gold, reported an 11 percent fall in fourth-quarter output after power outages at its Buzwagi mine, resulting in a 2 percent decline in full-year output.
Among other precious metals, silver was up 0.8 percent at $30.28 an ounce. The world's largest primary silver producer, Fresnillo , beat its annual output target and said it expected stable silver production in 2012. Silver prices fell sharply last year from a record near $50 an ounce it hit in April and underperformed gold in the full year, falling 10 percent against gold's 10 percent rise. Its ratio to gold is currently at 54.9, up from 31.7 in April. Spot platinum was down 0.9 percent at $1,506.49 an ounce, while spot palladium was down 0.1 percent at $647.72 an ounce.