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Gold Declines in New York as Growth Outlook Curbs Haven Demand

Jan. 24 (Bloomberg) -- Gold declined for a second day in New York as an improving outlook for economic growth curbed demand for the precious metal as a protection of wealth and the U.S. dollar strengthened.

China’s manufacturing expanded at the fastest pace in two years, a private survey of companies from HSBC Holdings Plc and Markit Economics showed today. The world economy will expand 3.5 percent this year from 3.2 percent in 2012, the International Monetary Fund said yesterday. The U.S. dollar advanced as much as 0.3 percent against a six-currency basket, curbing demand for bullion as an alternative investment.

“Even though there are no super-positive expectations for growth in 2013, it is still a stabilization and a moderate acceleration,” Filip Petersson, a commodities strategist at SEB AB in Stockholm, said today by e-mail. “In this environment the over-stretched gold market will probably have a hard time.”

Gold for February delivery fell 0.5 percent to $1,679 an ounce by 7:13 a.m. on the Comex in New York. Gold for immediate delivery dropped 0.4 percent to $1,679.90 an ounce in London.

“The reason we are lower today is simple,” David Govett, head of precious metals at Marex Spectron Group in London, said in a report. “The market is long, the market is bored, the market is getting restless.”

Gold advanced 7.1 percent last year, the smallest annual gain since 2008. Gold may drop to as low as $1,450 an ounce this year as disappointed investors seek higher returns in equities and other commodities, Vontobel Group estimates. Both Goldman Sachs Group Inc. and Credit Suisse Group AG expect bullion to peak this year as economic growth picks up.

Trading Volume

Gold futures volume was 62 percent above average for the past 100 days and silver volume was 23 percent higher, according to data on Bloomberg. Platinum and palladium futures volumes were lower.

Silver for March delivery slumped 1.7 percent to $31.905 an ounce. Palladium for March delivery dropped 0.9 percent to $719.50 an ounce and platinum for April delivery slid 0.2 percent to $1,688.60 an ounce.

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