Source: Bloomberg
Seattle— Gold in New York fell for the first time in five sessions after a drop in oil prices reduced the metal's appeal as a hedge against inflation.
The price of gold has followed oil this year. The metal has fallen 19 percent from a 26-year high partly as oil shed 25 percent from a record in July. Oil today traded above $60 a barrel before erasing gains. Gold is still up 14 percent this year.
“If oil is going to let up, that's going to help bring down the price of gold,'' said Mike Sander, a commodity broker at Altavest Worldwide Trading Inc. in Mission Viejo, California.
Gold futures for December delivery fell $5 or 0.8 percent, to $593.50 an ounce on the Comex division of the New York Mercantile Exchange. Prices had gained 3.9 percent in the previous four sessions.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
Some investors buy gold when energy expenses climb. Gold futures reached a record $873 an ounce in January 1980 when oil costs doubled in a year, sparking a surge in the inflation rate.
Losses accelerated today after gold climbed above $600 and failed to make further gains, analysts said. Investors have placed orders to sell the metal around $600, said Marty McNeill, a gold trader at R.F. Lafferty Inc. in New York.
`Resistance' at $600
“Gold is backing off from $600,'' McNeill said. “You have a lot of resistance at that level.''
Gold hasn't closed above $600 an ounce since Oct. 2.
“Gold came up to $600 and tested it but couldn't hold,'' Altavest's Sander said. “That's a bearish sign for gold.''
Lower oil and gold prices are a buying opportunity, Marc Faber, founder and managing director of the investment firm Marc Faber Ltd. in Hong Kong, said at a conference in London.
“Gold and oil are in a buying range,'' said Faber, who told investors to bail out of U.S. stocks a week before the 1987 so-called Black Monday crash. “I would buy gold at these levels. It's a good opportunity.''
Gold may also gain should tensions escalate with North Korea and investors buy the metal as a haven. South Korea said its northern neighbor may be preparing to test another nuclear bomb, after detonating one on Oct. 9.
“North Korea could become a big deal,'' said Frank McGhee, head metals trader at Integrated Borkerage Services Inc. in Chicago.
Silver for December delivery fell 13 cents, or 1.1 percent, to $11.78 an ounce. Palladium for December delivery dropped $4.95 or 1.5 percent, to $319.60 an ounce. Platinum for January delivery declined $8.30, or 0.8 percent, to $1,083 an ounce.
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