Gold fell in London after prices rose for seven consecutive trading sessions and to a seven-week high, prompting caution among investors.

Gold rose to a 26-year high of $730.40 an ounce on May 12 and then plunged to $542.45 on June 14 on expectations the U.S. Federal Reserve would signal the need to raise interest rates to contain inflation. The metal has stayed above $600 for two days, the longest stretch since early September.

``Of course there's going to be some cautiousness out there because in recent history gold wasn't able to hold above the $600 level,'' said Philip Newman, a senior metals analyst at London- based metals research company GFMS Ltd. ``Having said that, we still think the dollar will weaken and gold will move higher.''

Gold for immediate delivery fell $1.20, or 0.2 percent, to $616.40 an ounce at 10:52 a.m. in London. Prices yesterday climbed to $619.80, the highest since Sept. 7.

Before today, gold climbed 6.1 percent since Oct. 23. The gains indicated the Federal Reserve ``will start to lower rates because it doesn't want to have a recession,'' Newmont Mining Corp. President Pierre Lassonde said yesterday.

A slowing U.S. economy has weakened the dollar and increased demand for gold as an alternative investment. As of Oct. 31, five gold exchange-traded funds including the Lyxor Gold Bullion Securities on the London Stock Exchange had record assets of 15.83 million ounces, worth about $9.46 billion, from 15.57 million a month earlier, the producer-funded World Gold Council said yesterday.

`Highly Encouraging'

``I would say the three-week run we've had is highly encouraging and we anticipate more of it before year end,'' said Andrew Pullar, an analyst at Baker Steel Capital Managers LLP, a London-based investment company with about $550 million under management including gold stocks Nevsun Resources Ltd. in Vancouver, Johannesburg-based DRDGold Ltd. and Newcrest Mining Ltd., Melbourne. ``Some commentators are forecasting gold will be around $700 by year end and we certainly are positioning our portfolio to take advantage of it.''

Gold has gained 19 percent this year as the dollar dropped more than 7 percent against the euro.

``Gold will trade between $570 and $630 till interest rates are not reversed in the U.S. and European countries,'' said Ajoy Pathak, associate vice president at Kotak Commodity Securities Ltd. in Mumbai.