Gold declined in Asia as crude oil’s rally stalled and the dollar strengthened, reducing demand for the precious metal as a hedge against inflation and an alternative asset. Platinum was little changed.
Oil fell as much as 5.2 percent, after gaining 14 percent Dec. 31, on concern that a global economic contraction will limit fuel demand. The dollar was at $1.3870 a euro from $1.4045 late yesterday in New York.
“The relationship between gold and oil has steadily strengthened as the commodity boom has progressed,” Standard Chartered Plc’s analysts Helen Henton and Dan Smith wrote in a report. “While both were affected by deleveraging and risk aversion, the oil market is far more exposed to the deterioration in global growth. As the markets have become more settled, the relationship has strengthened again.”
Bullion for immediate delivery traded down 0.5 percent to $874.90 an ounce at 12:09 p.m. in Singapore, after rising as much as 1 percent earlier. Gold for February delivery was 0.8 percent lower at $875.40 in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.
Crude oil for February delivery dropped as much as $2.32 to $42.28 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It fell 4.3 percent to $42.70 a barrel at 12:41 p.m. Singapore time.
Silver Falls
Among other precious metals for immediate delivery, silver fell 1.8 percent to $11.185 an ounce, platinum was little changed at $935.50 an ounce, and palladium rose 1.2 percent to $189.25 an ounce as of 11:50 a.m. in Singapore.
Gold advanced 5.8 percent last year on demand for a store of value as the global financial crisis pushed major economies into recession and drove equity markets down.
“If one bought gold on January 1, 2008, instead of any other investment, they would still have everything they had come January 1, 2009,” Peter Grandich, managing member of Grandich Publications, said in a report. “How many people wish all they did was break even in 2008? Gold continues to offer not only that result, but gains of 20 percent or more in 2009.”
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