Gold Drops for a Third Day in London Trading as Crude Declines

By Rachel Graham

Sept. 2 (Bloomberg) -- Gold fell for a third day in London, leading precious metals lower, as crude oil slid, diminishing demand for the metal as an inflation hedge.

Crude traded near its lowest in five months after Hurricane Gustav passed the U.S. Gulf Coast without causing major damage to offshore platforms.

``Oil is down so gold is under pressure,'' Afshin Nabavi, a senior vice president at MKS Finance SA, one of Switzerland's four bullion refiners, said by phone from Geneva.

Gold for immediate delivery fell $12.89, or 1.6 percent, to $804.81 an ounce as of 8:35 a.m. in London, the lowest since Aug. 20. Gold futures for December dropped $13, or 1.6 percent, to $810.50 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange.

Among other metals for immediate delivery, silver dropped 35 cents, or 2.6 percent, to $13.0912 an ounce. Platinum fell $35.50, or 2.5 percent, to $1,410 an ounce and palladium fell $9.50, or 3.2 percent, to $292.25 an ounce.

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