Gold Falls for Fourth Day in London as Oil Drops; Silver Slides

By Rachel Graham

Sept. 3 (Bloomberg) -- Gold declined for a fourth day in London as crude-oil prices dropped, reducing demand for the metal as a hedge against inflation. Silver also fell.

Crude oil also slid for a fourth day as Hurricane Gustav caused minimal damage to refineries and rigs in the Gulf of Mexico and a stronger dollar curbed the appeal of commodities.

``Oil is heading lower,'' Andrew Millie, a trader at ODL Securities Ltd., said by phone from London today. ``Gold could come off further.''

Gold for immediate delivery fell $10.83, or 1.3 percent, to $794.52 an ounce as of 8:28 a.m. in London. Futures for December delivery dropped $12.50, or 1.5 percent, to $798 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange.

Switzerland's Zuercher Kantonalbank, which manages exchange- traded funds backed by precious metals, expects gold to rise between now and the end of the year, ZKB analyst Susanne Toren said by phone from Zurich. Some investors view gold as a haven investment against economic weakness.

``We are not completely over the credit crisis,'' Toren said. ``The economic problems that pushed gold higher haven't disappeared fully.''

She said gold may rise to $900 an ounce between now and the end of the year. ZKB retains its one-year target of $800 an ounce.

Among other metals for immediate delivery, silver fell 25 cents, or 1.9 percent, to $12.82 an ounce. Platinum fell $1, or 0.1 percent, to $1,401 an ounce and palladium rose $2.50, or 0.9 percent, to $292 an ounce.

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