Gold trades below 12-week high; growth weighed with US rates

Gold held below the highest in almost 12 weeks as investors weighed the outlook for the global economy against the prospect for higher U.S. rates. Silver fell from a one-month high as copper plunged, while palladium retreated.

Bullion for immediate delivery fell as much as 0.5 percent to $1,225.16 an ounce, and traded at $1,231.59 by 3:05 p.m. in Singapore, after rising 0.3 percent, according to Bloomberg generic pricing. The metal climbed to $1,244.29 yesterday, the highest since Oct. 23, before ending 0.2 percent lower as the euro weakened on concern Greece may abandon the euro.

The World Bank cut its forecast for global growth this year, with an improving U.S. economy and oil prices at the lowest in almost six years failing to offset slowdowns from Europe to China. That helped spark the biggest drop in copper since 2009. The International Monetary Fund, which plans to update estimates next week, cut the 2015 outlook in October, citing weak demand and residual debt from the financial crisis.

"The big drop in copper triggered some selling in precious metals as well," said Wallace Ng, a Shanghaibased trader at Gemsha Metals Co. "Sentiment has already been weak because the global economic momentum seems to be slowing, so money has been flowing out of commodities. It started with gold, then iron ore, then oil and now copper. Gold is holding up quite well because of some haven and seasonal demand."

Gold in euros held below the highest level since September 2013 as Greek Finance Minister Gikas Hardouvelis said the nation could exit the currency bloc as the opposition party holds a slim lead heading into the Jan. 25 elections.

The euro traded near a nine-year low amid speculation the European Central Bank will begin buying bonds as early as next week to stave off deflation, just as the Federal Reserve is considering the timing of its first rate rise since 2006. The Bloomberg Dollar Spot Index traded near a record close before data today that may show U.S. retail sales slid in December. "Rising economic risk in Europe, partly driven by political uncertainty in Greece, is boosting haven demand," Huang Wei, an analyst at Huatai Great Wall Futures Co., wrote in a note.