Gold Drops on Selling Linked to Weaker Equities; Silver Falls

By Marianne Stigset

Gold BarsSept. 14 (Bloomberg) — Gold fell for a third day in London on speculation that declining equities in Europe will spur some investors to sell the metal to raise cash. Silver also declined. European stocks fell the most in a week after Northern Rock Plc of the U.K. said the Bank of England agreed to provide emergency funds.

The drop in gold “is linked to the weakness in the stock markets, especially in Europe,” Peter Fertig, a consultant to Dresdner Kleinwort, said by phone from Hainburg, Germany. The Northern Rock issue “brings all the problems of the subprime woes back into the spotlight.”

Gold for immediate delivery fell $3.28, or 0.5 percent, to $705.03 an ounce as of 10:10 a.m. in London. The drop accelerated as the dollar rose against the euro, reducing the appeal of the precious metal as an alternative investment, Fertig said.

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