Gold rebounds on demand for safe haven

Gold rebounded from the biggest slide in a month in London as speculation that European banks will struggle to raise money boosted demand for the precious metal as a means of protecting wealth.

Gold for immediate delivery added $4.70, or 0.4 per cent, to $1,238.40 an ounce in London. The metal for August delivery was 0.1 per cent lower at $1,239.50 on the Comex in New York. The metal dropped 1.8 per cent on Monday after reaching a record $1,265.30 an ounce.

The metal is up 13 per cent this year and is headed for its 10th consecutive annual gain, the longest winning streak since at least 1920, amid speculation that debt-cutting measures by European nations will slow growth.

"There's some physical buying from the retail sector but I think there's not much. The market is consolidating after reaching record highs," said a dealer in Hong Kong.

"This is also a good time to take profits but I don't think gold will fall below $1,200. We may trade in a range of $1,230 to $1,248. If goes back to around $1,250, we may see another record high next week," he added.

The world's largest gold-backed exchange-traded fund, SPDR Gold Trust said its holdings were unchanged at a record high at 1,307.963 tonnes.