Gold extended losses to trade below $900 an ounce on Wednesday, as a sharp decline in oil prices lowered the metal’s appeal as a hedge against inflation.

Other precious metals followed gold, with platinum slipping more than 3 percent, silver falling 1.8 percent and palladium dropping around 1 percent in a broad commodities sell-off.

Gold fell about 2 percent to a two-week low of $889.35 am ounce and was quoted at $893.70/894.70 at 1007 GMT, against $907.10/908.30 in New York late on Tuesday, when if fell about 2 percent.

“Whenever we get a weaker dollar and stronger oil, it’s fantastic for gold and the reverse is playing out now,” said Nick Moore, global commodity analyst with ABN AMRO. “It’s a general commodity sell-off that we’re seeing which has embraced not only oil but also industrial metals and precious metals. This pullback is good for gold. This is a chance for them (physical buyers) before gold has its next run.”

Oil fell more than $2 a barrel, extending a slide from the previous session amid growing signs Asian demand could start to falter as consumer nations look to cut subsidies by raising local fuel prices.

Gold often moves in the opposite direction of the dollar. “With the most of the recent gains in gold coming largely from the rally in crude oil, it is obvious that as crude retraces back, gold would reflect that too,” Read Full Article

Related posts:

1. Gold Falls Most in Six Weeks as Dollar Rallies; Silver Declines
2. Gold Falls in London After Dollar Rebounds; Silver Also Drops
3. Gold Falls as Dollar Climbs for Second Day; Silver Declines
4. Gold falls 2 pct on dollar rise, profit-taking
5. Gold Drops on Selling Linked to Weaker Equities; Silver Falls
6. Gold’s 28 Percent Runup No Fluke
7. Gold Drops for Third Day in London as Euro Trades Near Week-Low
8. Gold hits three-week high, awaits key U.S. data
9. Rare Gold Coins Return 39.4 Percent on Investment, But Timing Is Everything, Reports a New Online Service
10. Platinum inches higher, gold hits 7-week low