Strong fight against debt crisis drives gold for biggest weekly drop since early 2009

Reuters, Friday 16 Sep 2011

Gold slipped more than 1 per cent on Friday, heading for its biggest weekly drop since March 2009, as stock markets gained and the euro rose after major central banks around the world strived to fight the debt crisis in Europe.

U.S. Treasury Secretary Timothy Geithner will discuss with European finance ministers the possibility of leveraging the euro zone's bailout fund as the world's main central banks aim to ease dollar funding for stricken banks.

Spot gold fell $21.45 an ounce to $1,767.19 by 06:34 GMT after falling 2 per cent in the previous session. Bullion struck a record around $1,920 last week on concerns the euro debt crisis could stall global growth.

"We favour maintaining our negative trading affair bias in today's trade," said Tom Pawlicki, precious metals and energy analyst at MF Global.

"Additional pressure will come from low expectations for quantitative easing at next week's FOMC meeting, and from technical factors which argue for a move down to $1,700-$1,750 an ounce in our opinion," he added.

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