LONDON, Jan 28: Gold slipped more than 1 per cent in Europe on Wednesday, extending the last session’s decline, as a firmer tone to equities and the euro showed the risk aversion that pushed bullion to a three-month high was ebbing.

Spot gold was quoted at $889.90/891.90 an ounce down from $897.35 late on Tuesday. Earlier it fell to a low of $882.40 after pushing through technical resistance just above $890.

Fears over the outlook for the economy and growing systemic risk are playing a greater role in the direction of gold than its more usual drivers at present, analysts said.

The 7 per cent rise in the SPDR Gold Trust’s bullion holdings this year is widely attributed to safe haven buying.

The trust, an exchange-traded fund which issues securities backed by physical stocks of bullion, has seen interest soar as risk-averse investors seek out physical gold.

However, jewellery demand remains depressed as prices hold near $900 an ounce, particularly in key global centres such as India, China and the Middle East.

Jewellers are not comfortable buying at such high prices, said Harshad Ajmera, proprietor of Kolkata bullion dealer JJ Gold House.

The German finance ministry said it had no plans to sell gold, after comments from government budget spokesman Steffan Kampeter on Tuesday that the Bundesbank could sell bullion reserves to finance the government’s stimulus measures.

Gold is considered the ultimate stable currency right now and I don’t think any central bank is interested...in selling its gold holdings, Weinberg said.

Among other precious metals, silver prices were little changed at $12.04/12.11 an ounce from $12.01.

Platinum and palladium were also steady, having lost well over half their value from the highs of early last year on fears over falling demand from carmakers.

Spot platinum was at $942/950 an ounce against $945, while spot palladium was at $187/192 from $188.50.—Reuters