March 28 (Bloomberg) -- Gold fell in New York after crude oil and other commodities declined, reducing the appeal of the precious metal as a hedge against inflation. Silver also fell.

The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials dropped for the first time this week on concern that a slowing U.S. economy may reduce demand. Gold reached a record $1,033.90 an ounce on March 17 as oil, soybean and platinum futures touched all-time highs this year. Oil fell for the first time in three sessions.

``If the economy looks like it's going to weaken and reduce demand for commodities,'' investors may reverse bets gold will rise because of inflation, said Frank Lesh, a trader at FuturePath Trading LLC in Chicago.

Gold futures for June delivery fell $15.90, or 1.7 percent, to $938.10 an ounce at 9:20 a.m. on the Comex division of the New York Mercantile Exchange. The price has gained 2 percent in the past week.

Silver futures for May delivery fell 50 cents, or 2.7 percent, to $18.05 an ounce. Before today, silver climbed 24 percent this year while gold advanced 14 percent.

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

Last Updated: March 28, 2008 09:23 EDT