By Feiwen Rong
Nov. 6 (Bloomberg) -- Gold fell in Asia after declining 3 percent yesterday on concern that a slumping U.S. economy may erode demand for commodities. Silver fell.
The worst global financial crisis since the Great Depression has curbed demand from builders and carmakers, damped prices and led to a 13 percent decline in the Reuters/Jefferies CRB Index of 19 raw materials in the past month. Gold, used by some investors as a hedge against inflation, has dropped 11 percent this year.
Gold is ``influenced by the softening in oil and other commodity prices,'' David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney, said today in a report.
Bullion for immediate delivery was down 0.4 percent at $737.65 an ounce at 1:55 p.m. in Singapore. Silver for immediate delivery fell 0.4 percent to $10.28 an ounce.
Yesterday's price decline followed a 5.5 percent jump the day of the U.S. presidential elections. U.S. equities also fell yesterday amid investor concern that Barack Obama, the president- elect, will have to contend with an economy pummeled by the fastest contraction in manufacturing in 26 years.
Companies in the U.S. cut an estimated 157,000 jobs in October, the most in almost six years, a private report based on payroll data showed yesterday. The drop was larger than forecast and followed a revised 26,000 decline in September that was bigger than previously estimated, ADP Employer Services said.
Dollar Rally
Bullion, together with other commodities, is also under pressure from the rallying dollar, Darren Heathcote, head of trading at Investec Bank Ltd. in Sydney, said in a report today.
The higher dollar, while ``offering some relief to producers,'' has been ``noticeably'' affecting consumers, said Hussein Allidina, an analyst at New York-based Morgan Stanley, in a report today. Indian gold imports fell by 27 percent in October from a year earlier, he said.
The dollar rose for the second day to $1.2865 against the euro at 1:55 p.m. in Singapore, from $1.2954 yesterday in New York. Crude oil fell by 1 percent after declining by more than $5 a barrel yesterday on a U.S. Energy Department report showing an unexpected increase in gasoline inventories.
``On the one hand, potential weakening emerging market growth, a rising U.S. dollar and falling inflationary concerns all offer serious headwinds for near-term precious metals prices,'' Morgan Stanley's Allidina said.
``On the other hand, the physical side remains remarkably strong with exchange-traded fund demand remaining resilient globally and bar and coin availability limited while central banks selling has almost evaporated and gold lease rates remain high,'' he added.
December-delivery gold fell 0.7 percent to $737.40 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.
Gold for October delivery in Tokyo declined 3.1 percent to 2,318 yen a gram ($737 an ounce) at 2:57 p.m. local time.
To contact the reporter on this story: Feiwen Rong in Singapore at frong2@bloomberg.net
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