Gold prices fell for a second day in London on confidence that European Union leaders will stabilize the bloc’s economy, reducing the appeal of the metal as a haven. EU Economic and Monetary Affairs Commissioner Olli Rehn this week called for a “comprehensive” package to contain the debt crisis and German Chancellor Angela Merkel indicated a desire to do “whatever is needed to support the euro.” European Central Bank President Jean-Claude Trichet said yesterday he may increase interest rates if needed to control inflation. “The marketplace believes the worst is over regarding the crisis of the euro zone,” said Daniel Briesemann, a Frankfurt- based analyst with Commerzbank. “Trichet regained some confidence in the ECB’s interest rate policy, which led to a lower need to be trading gold as a safe haven.” Spot gold fell $5.15, or 0.4 percent, to $1,368.63 an ounce at 9:49 a.m. in London. The price, which gained for a 10th year in 2010, yesterday fell the most in more than a week. Gold for February delivery on the Comex in New York fell $19.20, or 1.4 percent, to $1,367.80 an ounce. China said today it will raise its reserve requirement ratio for the nation’s lenders by 50 basis points from Jan. 20, the first move this year after six increases in 2010. The U.S. dollar rebounded on the news against a basket of six currencies. Gold usually moves inversely to the greenback. Spain sold 3 billion euros ($4 billion) of five-year bonds yesterday in its first debt auction of the year, meeting its maximum target. Demand was 2.1 times the amount sold, compared with 1.6 times at the previous sale. Italy sold 6 billion euros of debt due in 2015 and 2026. Physical Shortage Portugal sold 599 million euros of bonds due in 2020 at a yield of 6.716 percent on Jan. 12, as the country’s borrowing costs fell and demand rose. Gold futures may have fallen more than spot prices today because of a shortage of the physical commodity, said Mark O’Byrne, executive director of brokerage GoldCore Ltd. in Dublin. “The fact that spot is remaining firm while the futures prices have fallen may be a symptom of the increasing tightness in the physical market,” O’Byrne said. “Demand for physical bullion in the form of gold bars in Asia remains firm as seen in the higher premiums and there are reports of actual shortages of one kilo gold bars.” Palladium for immediate delivery fell $7.13, or 0.9 percent, to $800.25 an ounce in London after yesterday rising to $823.95 an ounce, the highest level since March 2001. Cash platinum gained 0.5 percent to $1,812.40 an ounce. The two metals are used in automotive pollution-control devices as well as jewelry. Immediate-delivery silver fell 0.3 percent to $28.62 an ounce. A lower price today would be the second straight decline.

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