Gold tumbles to two-month low as oil plummets

• Source: Xinhua
• [09:01 July 09 2009]
• Comments

Gold futures on the COMEX Division of the New York Mercantile Exchange dropped to a tow-month low on Wednesday as the plunging crude oil eased investors' concerns on inflation and curbed gold's appeal of storing value. Silver and platinum both went down.

Gold price for August delivery fell 19.80 US dollars, or 2.1 percent, finishing at 909.30 dollars an ounce, hitting as low as 904.80 dollars earlier in the session, the lowest level since the beginning of May.

The International Monetary Fund (IMF) downgraded its forecast for global economic growth in 2009 to a contraction of 1.4 percent, slightly lower than the estimation of 1.3 percent in April. Meanwhile, the growth in 2010 is raised to 2.5 percent, from an April projection of 1.9 percent.

Concerns on the global economic recovery weighed much on crude oil as investors anticipate the energy demand will decrease. The benchmark August crude oil fell 1.76 dollars to 61.17 dollars a barrel by the end of gold floor trading time. In the past six sessions, oil has lost more than 10 dollars, or 14 percent.

The plunging oil and other commodities effectively gave the signals that the risk of inflation is waning, and to buy gold as a hedge against inflation is no more that attractive for investors. On the economic front, the Federal Reserve said that consumer credit fell at an annual rate of 1.5 percent, or by 3.2 billion dollars from April, which indicates the US economy still faces a sluggish recovery despite the fact that economists had expected a deeper cut of 9.5 billion dollars.

September silver finished at 12.852 dollars per ounce, down 36. 8 cents. October platinum fell 34 dollars to 1,101.80 dollars an ounce.