Gold drops as inflation concern fades
New York (Nov 14) Gold and silver fell, while platinum reached a five-year low, as slumping oil prices cut demand for an inflation hedge and the dollar strengthened.
About 89 percent of respondents in a Bloomberg Global Poll said disinflation or deflation is a greater threat in the euro area than inflation over the next year. West Texas Intermediate crude is heading for the longest run of weekly declines in almost three decades amid speculation that OPEC will refrain from cutting production to ease concern of a supply glut.
Investors, who often buy gold to protect against rising consumer prices, are holding the least bullion through exchange- traded products since 2009. The metal has fallen four of the past five days and is down 2.1 percent this week as the dollar extended its rally on speculation that U.S. policy makers will raise interest rates next year.
“Persistent outflows from gold ETFs further suggest how fragile sentiment toward gold has turned,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report today. “U.S. equities and slumping oil prices continued to weaken appetite for the yellow metal.”