Gold Little Changed After Declining as Energy, Food Costs Drop

By Jae Hur

July 8 (Bloomberg) -- Gold was little changed after falling yesterday as a decline in energy costs and food prices, including corn and soybeans, eroded the appeal of the precious metals as a hedge against inflation.

Gold fell 0.8 percent yesterday as commodities plunged the most since March, led by tumbling U.S. grain futures on the improved crop weather prospect. Crude oil lost 2.7 percent yesterday amid short-lived gains in the dollar and signs economic growth is slowing across Europe, which may curtail energy demand.

``Gold took a pause today after a broad-based decline in commodities yesterday,'' said Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd. in Tokyo. Bullion may take a cue from the currency and crude oil markets, Sugata said.

Bullion for immediate delivery was up 0.1 percent at $926.90 an ounce at 10:06 a.m. in Singapore after trading between $924.24 and $928.30. Silver was up 0.2 percent at $17.81 an ounce after losing 1.7 percent.

Crude oil for August delivery rose 43 cents, or 0.3 percent, to $141.80 a barrel at 10:19 a.m. Singapore time on the New York Mercantile Exchange. Yesterday, oil fell as much as 4 percent before closing at $141.37 as the dollar rose amid speculation that leaders from the Group of Eight industrialized nations may signal support for the currency and address high energy prices.

The Reuters/Jefferies CRB Index fell 2.8 percent to 460.23, the biggest drop since March 19. Corn, soybeans, wheat and cotton plunged the maximum allowed by U.S. exchanges. Crude oil dropped 2.7 percent amid signs economic growth is slowing across Europe.

Gold for August delivery was 0.1 percent lower at $928 an ounce in after-hours electronic trading on Comex at 10:09 a.m. Singapore time.

Gold for June 2009 delivery was up 2 yen at 3,222 yen a gram ($935 an ounce) on the Tokyo Commodity Exchange at the 11 a.m. local time midday break, while gold for December delivery traded in Shanghai was up 0.1 percent at 205.01 yuan a gram ($930 an ounce) at 10:13 a.m. local time.

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net