The Standard & Poor's 500 Index was poised to snap a six- week slump on speculation that U.S. banks have weathered the credit crisis. European stocks gained for the third straight day. Oil traded below $130 a barrel after paring earlier gains. Gold, traditionally a haven in times of financial turmoil, reached a record $1,033.90 an ounce on March 17.
``You're just seeing the risk appetite return a little bit,'' said Matt Zeman, a metals trader at LaSalle Futures Group Inc. in Chicago. ``Gold is giving up some of its gains because investors are buying back equities.''
Gold futures for August delivery fell $12.70, or 1.3 percent, to $958 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, the most-active contract touched $950.20, the lowest price in a week. The S&P 500 has gained 1.3 percent this week while gold dropped 0.3 percent.
Silver futures for September delivery fell 53.5 cents, or 2.9 percent, to $18.20 an ounce. The metal still has gained 22 percent this year, while gold climbed 14 percent.
Citigroup Inc., the largest U.S. bank by assets, led the S&P 500's gainers after the company lost less than estimated in the second quarter on fewer mortgage-bond writedowns. Before today, the shares had dropped 39 percent this year.
Still, investors concerned that the credit crisis isn't over may be attracted to gold at current prices, Zeman said. Gold fell 2.1 percent in the past three days.
`Next Writedown'
``As soon as we get the next writedown, a lot of these assets will reverse,'' LaSalle's Zeman said. ``Gold looks like a good buying opportunity.''
This week, Fannie Mae and Freddie Mac, the biggest providers of financing for U.S. home loans, fell to the lowest in 17 years in New York Stock Exchange composite trading. Worldwide, financial firms have recorded $447.2 billion in writedowns since the second quarter of 2007.
``It is much too soon to call an end to the safe-haven buying,'' UBS AG analyst John Reade said in a report. ``While we have not seen any repeat of major inflow into the U.S. gold ETF, recent flows have been positive. It is interesting that there was no redemption, considering the quick fall in gold.''
Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by gold, jumped 7.2 percent last week to an all-time high of 705.9 metric tons on July 11. The fund dropped to 701.9 tons on July 14 and rose to 702.5 tons yesterday.
