Gold fell half a percent on Thursday on a proposed peace plan for Libya brokered by Opec-member Venezuela to end violent unrest in the country.

Embattled Libya leader Muammar Gaddafi and the president of the Arab League have agreed to a plan by Venezuelan President Hugo Chavez to send representatives from several countries to Libya.

"If some sort of resolution is achieved for Libya, it will certainly affect gold -- investors will take profit and adjust their long positions," said Ong Yi Ling, an analyst at Phillip Futures.

Investors had not expected a prompt resolution to the Libya crisis, and bet on further rise in gold.

Spot gold fell as much as 0.7 percent and more than $11 from an intraday high of $1,436.15 at heel of the news. It was trading at $1,427.44 an ounce by 0626 GMT, down half a percent. US gold futures lost 0.7 percent at $1,428.20.

A key support level is seen around $1,420, traders said.     

Investors are watching an ECB policy meeting later on Thursday, where the central bank is expected to step up anti-inflation rhetoric and may phase out some of its crisis support measures.  - Reuters