Gold Declines in London as Crude Oil Drops; Platinum Slides

By Rachel Graham

Sept. 23 (Bloomberg) -- Gold had its first drop in three trading sessions in London as crude-oil prices fell, easing demand for the metal as an inflation hedge.

Crude oil declined in New York on concern the U.S. government's bailout plan for financial companies will fail to prevent a recession.

``If oil comes off, then gold should head down again,'' Wolfgang Wrzesniok-Rossbach, head of marketing and sales at Heraeus Metallhandels GmbH, said by phone from Hanau, Germany.

Gold for immediate delivery slid $2.65, or 0.3 percent, to $894.35 an ounce as of 12:01 p.m. in London. Futures for December fell $9, or 1 percent, to $900 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange.

Platinum for immediate delivery dropped $48.60, or 3.9 percent, to $1,207.40 an ounce.

Gold and platinum held in London-listed exchange-traded funds managed by ETF Securities Ltd. declined.

Gold held by the Jersey, Channel Islands-based company fell 1.9 percent to 1.536 million ounces as of Sept. 19, data posted on company's Web site showed. Most of the gold backs the ETFS Physical Gold product. The company held a record 1.898 million ounces in its funds as recently as Sept. 3.

Platinum assets held in the company's funds dropped 1 percent to 200,841 ounces. The record was 418,247 ounces held July 7.

Palladium for immediate delivery fell $2.25, or 0.9 percent, to $255.25 an ounce in London.

Reduced Forecasts

UBS AG said it cut one- and three-month forecasts for palladium because of rising implied stocks of the metal in Switzerland, calculated from net import data.

``The increase in implied Swiss stocks in August was due to a jump in Russian exports: 10.4 tons of Russian palladium entered Switzerland in August, a massive jump on the monthly shipments seen this year,'' the bank said in an e-mailed report today.

The bank cut its one-month palladium forecast to $270 an ounce from $300 previously. It reduced its three-month forecast to $300 from a previous $350 an ounce.

Silver for immediate delivery fell 8 cents, or 0.6 percent, to $13.37 an ounce.

To contact the reporter on this story: Rachel Graham in London at rgraham13@bloomberg.net