The price of gold has followed oil this year. The metal has fallen 19 percent from a 26-year high, partly as oil shed 26 percent from a record in July. Oil today fell as much as 2.7 percent after climbing above $59 a barrel. Gold is up 14 percent this year.
``Gold is really following the crude market,'' said Michael Guido, director of hedge-fund marketing at Societe Generale in New York. ``A fall below $58 could drag gold down further.''
Gold futures for December delivery fell 90 cents, or 0.2 percent, to $592.60 an ounce on the Comex division of the New York Mercantile Exchange. Prices dropped 0.8 percent yesterday.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
Some investors buy gold when energy expenses climb. Gold futures reached a record $873 an ounce in January 1980 when oil costs doubled in a year, sparking a surge in the inflation rate. Oil dropped today after U.S. inventories last week gained more than analysts forecast.
Gold's losses accelerated after the Dow Jones Industrial Average breached 12,000 for the first time. A rally in equities may attract speculative money away from gold, other metals, energy and agricultural products, traders said.
`Take Money'
``There was concern with the stock market,'' said Nick Ruggiero, a trader at Eagle Futures Inc. in New York. ``If the Dow keeps rallying, that's going to take money from gold and all the commodities.''
Hedge-fund managers and other large speculators decreased their net-long position in Comex gold futures in the week ended Oct. 10, according to Commodity Futures Trading Commission data.
Speculative long positions, or bets prices will rise, outnumbered short positions by 62,449 contracts on the Comex, down 10 percent from a week earlier, and the lowest this year, the Washington-based commission said Oct. 13.
``One of the biggest threats to commodities is the flow of money into equities,'' Societe Generale's Guido said. ``That could strip money from the gold market.''
The Reuters/Jefferies CRB Index fell for a second straight day. The gauge of 19 commodities reached a record in May and plunged 12 percent in the third quarter, the most in 50 years.
Gold opened higher, buoyed by reports that showed consumer prices continued to rise, even as oil prices dropped in the past three months. Excluding food and energy, so-called core prices rose 0.2 percent in September, the Labor Department said today.
Core prices rose 2.9 percent from a year earlier, the biggest 12-month jump since February 1996, after a 2.8 percent gain in August.
Core prices paid to U.S. producers rose 0.6 percent in September, the agency reported yesterday. The increase was the biggest since January 2005.
``Given gold's general role as an inflation hedge, a person can buy gold on the core numbers,'' said Daniel Vaught, a commodity analyst at A.G. Edwards Inc. in St. Louis. ``The core numbers remain relatively high.''
