Gold falls as oil loss cuts hedge appeal

Gold prices declined in Asia as a fall in the oil prices reduced the precious metal's appeal to investors as a hedge against inflation. Silver was little changed as some Asian markets are closed for the Easter holiday.

Gold often moves in line with the oil prices. Oil fell today on easing concerns about supply disruptions after Iran released 15 British sailors and marines whom it had held for 13 days. "Sentiment is bearish following a decline in the oil prices and last week's strong US job data numbers,'' said Kazuhiko Saito, chief analyst at Interes Capital Management in Tokyo.

Gold for immediate delivery fell as much as $4.75, or 0.7 per cent, to $670.25 an ounce and traded at $672.10 an ounce at 11:38 am Mumbai time. On the Tokyo Commodity Exchange, gold for delivery in February 2008 fell 1 yen to 2,598 yen a gram ($677) at 311 pm Tokyo time.

The US currency last week rebounded from a two-year low against the euro as a report showed that employers added more workers than forecast in March, reducing speculation the Federal Reserve will cut borrowing costs in the third quarter.

"Looking at the current indicators, it seems the Fed will have little reason to lower rates, which is bearish for gold,'' said Kishore Narne, head of research at Mumbai-based Anand Rathi Commodities said.

Crude oil for May delivery fell 42 cents, or 0.7 per cent, to $63.86 a barrel in after-hours electronic trading on the New York Mercantile Exchange at 11:44 am Mumbai time.

The fall in energy prices and the U.S. economic data last week lifted the dollar and shares, making gold less attractive to investors, Saito said. Markets in Hong Kong and Australia are closed today for Easter and there is no gold "fixing'' in London because of the holiday.

Gold futures for June delivery fell $2.50, or 0.4 per cent, to $676.90 an ounce at 11:45 a.m. Mumbai time in after-hours electronic trading at the Comex division of the New York Mercantile Exchange.

In India, the price of the metal for June delivery fell Rs 37, or 0.4 per cent, to Rs 9,510 per 10 grams ($689 an ounce) at 11:46 a.m. Mumbai time on the Multi Commodity Exchange.

Twenty of the 31 traders, investors and analysts surveyed by Bloomberg News from Sydney to Chicago on April 4 and April 5 advised buying gold, which rose $10.40, or 1.6 per cent to $679.40 an ounce last week on the Comex division. Seven respondents advised a sell and four were neutral.

Silver for immediate delivery was little changed at $13.68 an ounce. Platinum fell $1, or 0.1 per cent, to $1,248.50 and palladium gained $1.00 to $354.5 an ounce.

A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.