Gold prices declined in Asia as a fall in the price of crude oil reduced the appeal of the metal as a hedge against inflation.
Bullion usually moves in tandem with oil as investors buy gold when energy costs rise. The metal has fallen 1.8% this year while oil dropped 13% as mild weather in the US cut winter fuel demand in the world's biggest oil consumer. „Gold's basically following crude at the moment,” Daniel Or, gold trader at ScotiaMocatta, the bullion arm of the Bank of Nova Scotia, said by phone from Hong Kong today.
Gold for immediate delivery fell as much as $2, or 0.3%, to $624.70 and traded at $625.35 at 10:54 a.m. Mumbai time. It settled at $626.70 in New York late yesterday. Gold may slip to $618 in the next few days, said Vineet Rai, manager at Mumbai-based Sri Krishna Jute Trade. Crude oil for February delivery was at $52.44 a barrel, down 55 cents, in after-hour electronic trading on the New York Mercantile Exchange at 11:00 a.m. in Mumbai. Gold is most likely to fluctuate between $620 and $630 an ounce today, Or said.
Bullion traded in Japan rose on optimism a likely increase in Japanese interest rates will boost the yen versus the dollar, said Chiaki Kanako, chief dealer at Tanaka Kikinzoku, Japan's biggest gold wholesaler. Bank of Japan Governor Toshihiko Fukui and his board colleagues will probably lift the key overnight lending rate to 0.5% at a meeting concluding January 18, according to 35 of 52 economists surveyed by Bloomberg News.
Gold for December delivery rose ¥4, or 0.2%, to ¥2,443 a gram ($631 an ounce) on the Tokyo Commodity Exchange at 2:32 p.m. local time. Gold futures for February delivery were at $626.00 an ounce, down 90 cents at 10:59 a.m. Mumbai time on the Comex division of the New York Mercantile Exchange. In India, the price of the metal for February delivery fell 0.3% to 9,033 rupees per 10 grams, or 28,092 rupees ($634) an ounce, at 11:01 a.m. local time on the Multi Commodity Exchange. A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date. (Bloomberg)