Gold Falls to Four-Year Low as Oil Skid Damps Inflation

Gold futures fell to the lowest since 2010 after crude oil’s slump to a three-year low in the U.S. eroded demand for the precious metal as an inflation hedge.

Societe Generale SA’s Michael Haigh, who correctly predicted gold’s slump last year, said on Oct. 30 that the drop in crude underscores that inflation will be muted, damping prospects for the metal. Oil entered a bear market last month as global demand ebbed and supplies jumped.

Gold headed for a consecutive annual drop for the first time since 1998. The dollar has surged against a basket of currencies after Japan expanded monetary stimulus last week, and the Federal Reserve moved closer to its first interest-rate increase in eight years. On Oct. 31, the metal touched $1,160.50 an ounce, the lowest intraday price since July 2010.

“Gold’s inflation premium is fast disappearing with falling oil prices,” Paul Kavanaugh, the director of business development at FuturePath Trading LLC in Chicago, said in a telephone interview. “The overall sentiment is weak as the dollar has become attractive after the Fed ended the stimulus program.”

On the Comex in New York, gold futures for December delivery fell 0.2 percent to close at $1,167.20 at 1:43 p.m. That was the lowest settlement for a most-active contract since July 28, 2010. The price fell for the fifth straight session, the longest slump since Sept. 12.

The metal in 2014 has dropped 2.9 percent. In 2013, gold tumbled 28 percent, ending a 12-year rally.

Silver Drops

Silver futures for December delivery fell 1.5 percent to $15.953 an ounce, the lowest settlement since Feb. 23, 2010. The price, down 18 percent this year, headed for a consecutive annual decline for the first time since 1992.

On the New York Mercantile Exchange, platinum futures for January delivery fell 1.5 percent to $1,224.70 an ounce, the lowest settlement since Aug. 17, 2009.

Palladium futures for delivery in December declined 1.7 percent to $790.65 an ounce.

Platinum has dropped 11 percent this year, while palladium gained 10 percent.

Today, the spot platinum-palladium ratio fell as much as 0.9% to 1.5282, the lowest since May 23, 2002, according to Bloomberg generic prices. The spread climbed 0.9% to 1.5568 at 3:40 p.m.

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