Gold fell in New York to the lowest settlement price in seven weeks on speculation that European Union leaders will stabilize the region’s economy, eroding the appeal of the metal as a haven.

The euro was headed for the biggest weekly gain against the dollar since May 2009. German Chancellor Angela Merkel said this week she would do “whatever is needed to support the euro.” European Central Bank President Jean-Claude Trichet said yesterday he may increase interest rates to control inflation. Gold gained 30 percent last year as the ECB and the International Monetary Fund bailed out Greece and Ireland.

“The marketplace believes the worst is over regarding the crisis of the euro zone,” said Daniel Briesemann, a Frankfurt- based analyst with Commerzbank AG. “Trichet regained some confidence in the ECB’s interest-rate policy, which led to a lower need to be trading gold as a safe haven.”

Gold futures for February delivery fell $26.50, or 1.9 percent, to settle at $1,360.50 an ounce at 1:37 p.m. on the Comex in New York, the lowest closing price since Nov. 22. Earlier, the metal touched $1,354.60, the lowest intraday level since Jan. 7.

This week, gold dropped 0.6 percent, the second straight decline. The price is down 5 percent from the record of $1,432.50 on Dec. 7.

Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter, said gold was “toppy” and advised clients to reduce their positions by half. Yesterday, he recommended cutting holdings of gold and silver by a third.

‘Run Its Course’

“Gold has run its course for a while,” Gartman said. Last year, he advocated selling euros to buy gold to hedge against a relatively strong dollar.

Silver futures for March delivery dropped 94.3 cents, or 3.2 percent, to $28.32 an ounce, the lowest settlement price since Dec. 8. The metal dropped 1.2 percent this week after tumbling 7.3 percent last week. The commodity jumped 84 percent in 2010.

Palladium futures for March delivery declined $22.95, or 2.8 percent, to $790.50 an ounce on the New York Mercantile Exchange.

Platinum futures for April delivery slipped $5.20, or 0.3 percent, to $1,816 an ounce.

This week, palladium gained 4.6 percent this week and platinum rallied 4.5 percent. The metals are used in jewelry and pollution-control devices in vehicles.