JULY 19, 2010, 3:00 P.M. ET.

PRECIOUS METALS: Gold Falls On Slim Demand For Haven Assets

By Matt Day Of DOW JONES NEWSWIRES NEW YORK

Gold futures fell Monday to their lowest levels since late May as stability in other markets reduced the demand for an alternative asset.

Gold for August delivery fell $6.30, or 0.5%, to $1,181.90 an ounce on the Comex division of the New York Mercantile Exchange, the lowest price for a most-active contract since May 21. Gold prices are down 6% from June's record highs.

"We just don't have any fear factor to drive gold at the moment," said Frank Lesh, broker and analyst with FuturePath Trading in Chicago.

Some investors bought gold as a hedge against instability in the euro during Europe's debt crisis. Those bets have largely been unwound as Europe shows signs of managing its fiscal situation, analysts say. The euro has been on the rise since early June, and gold prices recently have dropped on the European currency's strength.

U.S. equities markets were also stronger Monday, lessening investors' appetite for precious metals.

But concerns remain about the pace of economic recovery after weeks of disappointing economic data, analysts say.

"In this environment, where you have such uncertainty, normally [precious metals] are going to go up," said Larry Young, president of Covenant Trading in Chicago. The pullback that started at the end of June "is just gaining momentum," he said.

Demand for a refuge asset had propelled gold to records in May and June as signs of a slowdown in U.S. growth compounded worries about Europe. Some believe gold holds its value better than other assets during economic turmoil.

Silver futures fell Monday to a six-week low. Comex September silver settled down 24.5 cents, or 1.4%, at $17.543 an ounce.

Platinum and palladium futures were split in muted trading. Platinum eked out small gains in a rally late in the day, while palladium was down throughout the day on mixed industrial sentiment. Nymex October platinum settled up $1, at $1,513.10 an ounce. September palladium fell $4.70, or 1.1%, to $443.90 an ounce.

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