Gold Prices Decline In New York
 24th NOV 2006

Gold in New York fell for the third straight session on Wednesday after prices paid to United States producers matched the biggest monthly slide ever in October, reducing the precious metal’s appeal as a hedge against inflation.

The 1.6 per cent drop in prices paid to factories, farmers and other producers followed a 1.3 per cent decline in September. Analysts expect the US to report lower consumer prices on November 16, 2006. Gold dropped 1.2 per cent in the previous two sessions.

“There’s no inflation,” said Marty McNeill, a trader at R.F. Lafferty Inc in New York. “If the PPI is down, gold usually would go lower.”

Gold futures for December delivery fell 50 cents to $625.30 an ounce at 1:25 p.m. on the Comex division of the New York Mercantile Exchange. Prices earlier dropped as much as $5.80 and gained as much as $4.60.

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

The Reuters/Jefferies CRB Index of 19 commodities has fallen 15 per cent from a record in May, led by declines in oil, copper and sugar.

Declines in gasoline prices probably caused US consumer prices to drop for a second month in October, according to a survey of economists.

“We’ll have to see if the CPI is confirmation of lower inflation,” McNeill said.

Still, gold may rebound should slowing prices reduce the chances US Federal Reserve officials will raise interest rates, leading to a weaker dollar, some analysts said.

Gold gained as much as 0.7 per cent earlier on speculation rates may fall. The precious metal is up 20 per cent this year.

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