Gold Falls in New York Trading

LONDON- Gold slipped on Friday undermined by growing perceptions further stimulus measures from the United States were unlikely and by a higher dollar against the euro, which was under pressure from concern about the results of European bank stress tests.

Spot gold was bid at $1,583.49 a troy ounce at 1310 GMT from $1,586.75 an ounce late in New York on Thursday when the precious metal hit a record high of $1,594.16.

Gold recovered some losses after U.S. annual core inflation, which excludes food and energy, for June rose to its highest level since January 2010.

"High core inflation ... reduces the chances of more (U.S. monetary easing) and should support the dollar," said Carsten Fritsch, commodity analyst at Commerzbank.

A higher dollar makes commodities priced in the U.S. currency more expensive for holders of other currencies.

"But people are looking at the other side of the coin and buying gold as an inflation hedge," Fritsch said.

U.S. Federal Reserve chairman Ben Bernanke said on Thursday the central bank is prepared to act if the recovery falters, but made clear the Fed was not at that point.

The biggest risk to gold at current prices is not just investors banking profits,” but also scrap supply, Edel Tully, a London-based analyst at UBS, said in a report today. Still, “the overall macroeconomic climate is very supportive of gold.”

Gold for August delivery fell $6.70, or 0.4 percent, to $1,582.60 an ounce by 8 a.m. on the Comex in New York. Prices are up 2.7 percent this week and rose the previous eight days, the longest streak of gains since April. Immediate-delivery gold was down 0.3 percent at $1,582.10 in London after reaching a record $1,594.45 yesterday.

With gold above $1,580 an ounce, physical sales are the strongest in more than 13 months, Standard Bank Plc said today in a report. Physical buying when the metal was close to $1,500 was the strongest in more than 15 months, it said.

S&P said it may lower the U.S.’s long-term rating by one or more notches into the AA category if it concludes Congress and President Barack Obama’s administration haven’t achieved a credible solution to the rising government debt burden and aren’t likely to achieve one in the near future. Moody’s Investors Service put the U.S.’s Aaa credit rating on review for a downgrade on July 13, citing concern officials won’t raise the debt limit in time to prevent a missed payment.