Gold falls 2 percent to 2-week low on oil slide

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LONDON, May 28 (Reuters) Gold extended losses to trade below 0 an ounce on Wednesday, as a sharp decline in oil prices lowered the metal's appeal as a hedge against inflation.

Other precious metals followed gold, with platinum slipping more than 3 percent, silver falling 1.8 percent and palladium dropping around 1 percent in a broad commodities sell-off.

Gold fell about 2 percent to a two-week low of 9.35 am ounce and was quoted at 3.70/894.70 at 1007 GMT, against 7.10/908.30 in New York late on Tuesday, when if fell about 2 percent.

''Whenever we get a weaker dollar and stronger oil, it's fantastic for gold and the reverse is playing out now,'' said Nick Moore, global commodity analyst with ABN AMRO.

''It's a general commodity sell-off that we're seeing which has embraced not only oil but also industrial metals and precious metals. This pullback is good for gold. This is a chance for them (physical buyers) before gold has its next run.'' Oil fell more than LONDON, May 28 (Reuters) Gold extended losses to trade below $900 an ounce on Wednesday, as a sharp decline in oil prices lowered the metal's appeal as a hedge against inflation.

Other precious metals followed gold, with platinum slipping more than 3 percent, silver falling 1.8 percent and palladium dropping around 1 percent in a broad commodities sell-off.

Gold fell about 2 percent to a two-week low of $889.35 am ounce and was quoted at $893.70/894.70 at 1007 GMT, against $907.10/908.30 in New York late on Tuesday, when if fell about 2 percent.

''Whenever we get a weaker dollar and stronger oil, it's fantastic for gold and the reverse is playing out now,'' said Nick Moore, global commodity analyst with ABN AMRO.

''It's a general commodity sell-off that we're seeing which has embraced not only oil but also industrial metals and precious metals. This pullback is good for gold. This is a chance for them (physical buyers) before gold has its next run.'' Oil fell more than $2 a barrel, extending a slide from the previous session amid growing signs Asian demand could start to falter as consumer nations look to cut subsidies by raising local fuel prices.

Bullion investors also watched the dollar and awaited the release of U.S. durable goods figures for April at 1230 GMT. The currency steadied after dipping against a basket of currencies.

Gold often moves in the opposite direction of the dollar.

''With the most of the recent gains in gold coming largely from the rally in crude oil, it is obvious that as crude retraces back, gold would reflect that too,'' Pradeep Unni, analyst at Vision Commodities said in a market note.

BROAD SELL-OFF In other bullion markets, U.S. gold futures for June delivery fell $14.40 to $893.50 an ounce.

China, the world's second-largest gold producer last year, is expected to surpass South Africa and become the world's top producer in 2008 as it raises output from 270.5 tonnes to 300 tonnes this year.

In other precious metals, spot platinum fell to a two-week low $2,035.50/2,055.50 an ounce from $2,118/2,138 late in New York on Tuesday.

Platinum futures in Japan also declined sharply, with the most active April contract falling a daily-limit of 300 yen and settling at the day's low of 6,740 yen.

The metal's major industrial use is in catalysts, particularly in diesel catalysis, to help clean environmentally damaging fumes from motor exhausts.

''We still expect dips to be viewed as buying opportunities, given the tight market fundamentals and likelihood of further investment demand/supply disruptions,'' James Moore, precious metals analyst at TheBullionDesk.com, said.

Silver fell as low as $17.09 an ounce and was last quoted at $17.22/17.27, versus $17.41/17.47 late on Tuesday. Palladium was at $433/$438 an ounce, down from $436.50/444.50.

UNI SBA AS1750 a barrel, extending a slide from the previous session amid growing signs Asian demand could start to falter as consumer nations look to cut subsidies by raising local fuel prices.

Bullion investors also watched the dollar and awaited the release of U.S. durable goods figures for April at 1230 GMT. The currency steadied after dipping against a basket of currencies.

Gold often moves in the opposite direction of the dollar.

''With the most of the recent gains in gold coming largely from the rally in crude oil, it is obvious that as crude retraces back, gold would reflect that too,'' Pradeep Unni, analyst at Vision Commodities said in a market note.

BROAD SELL-OFF In other bullion markets, U.S. gold futures for June delivery fell .40 to 3.50 an ounce.

China, the world's second-largest gold producer last year, is expected to surpass South Africa and become the world's top producer in 2008 as it raises output from 270.5 tonnes to 300 tonnes this year.

In other precious metals, spot platinum fell to a two-week low LONDON, May 28 (Reuters) Gold extended losses to trade below $900 an ounce on Wednesday, as a sharp decline in oil prices lowered the metal's appeal as a hedge against inflation.

Other precious metals followed gold, with platinum slipping more than 3 percent, silver falling 1.8 percent and palladium dropping around 1 percent in a broad commodities sell-off.

Gold fell about 2 percent to a two-week low of $889.35 am ounce and was quoted at $893.70/894.70 at 1007 GMT, against $907.10/908.30 in New York late on Tuesday, when if fell about 2 percent.

''Whenever we get a weaker dollar and stronger oil, it's fantastic for gold and the reverse is playing out now,'' said Nick Moore, global commodity analyst with ABN AMRO.

''It's a general commodity sell-off that we're seeing which has embraced not only oil but also industrial metals and precious metals. This pullback is good for gold. This is a chance for them (physical buyers) before gold has its next run.'' Oil fell more than $2 a barrel, extending a slide from the previous session amid growing signs Asian demand could start to falter as consumer nations look to cut subsidies by raising local fuel prices.

Bullion investors also watched the dollar and awaited the release of U.S. durable goods figures for April at 1230 GMT. The currency steadied after dipping against a basket of currencies.

Gold often moves in the opposite direction of the dollar.

''With the most of the recent gains in gold coming largely from the rally in crude oil, it is obvious that as crude retraces back, gold would reflect that too,'' Pradeep Unni, analyst at Vision Commodities said in a market note.

BROAD SELL-OFF In other bullion markets, U.S. gold futures for June delivery fell $14.40 to $893.50 an ounce.

China, the world's second-largest gold producer last year, is expected to surpass South Africa and become the world's top producer in 2008 as it raises output from 270.5 tonnes to 300 tonnes this year.

In other precious metals, spot platinum fell to a two-week low $2,035.50/2,055.50 an ounce from $2,118/2,138 late in New York on Tuesday.

Platinum futures in Japan also declined sharply, with the most active April contract falling a daily-limit of 300 yen and settling at the day's low of 6,740 yen.

The metal's major industrial use is in catalysts, particularly in diesel catalysis, to help clean environmentally damaging fumes from motor exhausts.

''We still expect dips to be viewed as buying opportunities, given the tight market fundamentals and likelihood of further investment demand/supply disruptions,'' James Moore, precious metals analyst at TheBullionDesk.com, said.

Silver fell as low as $17.09 an ounce and was last quoted at $17.22/17.27, versus $17.41/17.47 late on Tuesday. Palladium was at $433/$438 an ounce, down from $436.50/444.50.

UNI SBA AS1750 ,035.50/2,055.50 an ounce from LONDON, May 28 (Reuters) Gold extended losses to trade below $900 an ounce on Wednesday, as a sharp decline in oil prices lowered the metal's appeal as a hedge against inflation.

Other precious metals followed gold, with platinum slipping more than 3 percent, silver falling 1.8 percent and palladium dropping around 1 percent in a broad commodities sell-off.

Gold fell about 2 percent to a two-week low of $889.35 am ounce and was quoted at $893.70/894.70 at 1007 GMT, against $907.10/908.30 in New York late on Tuesday, when if fell about 2 percent.

''Whenever we get a weaker dollar and stronger oil, it's fantastic for gold and the reverse is playing out now,'' said Nick Moore, global commodity analyst with ABN AMRO.

''It's a general commodity sell-off that we're seeing which has embraced not only oil but also industrial metals and precious metals. This pullback is good for gold. This is a chance for them (physical buyers) before gold has its next run.'' Oil fell more than $2 a barrel, extending a slide from the previous session amid growing signs Asian demand could start to falter as consumer nations look to cut subsidies by raising local fuel prices.

Bullion investors also watched the dollar and awaited the release of U.S. durable goods figures for April at 1230 GMT. The currency steadied after dipping against a basket of currencies.

Gold often moves in the opposite direction of the dollar.

''With the most of the recent gains in gold coming largely from the rally in crude oil, it is obvious that as crude retraces back, gold would reflect that too,'' Pradeep Unni, analyst at Vision Commodities said in a market note.

BROAD SELL-OFF In other bullion markets, U.S. gold futures for June delivery fell $14.40 to $893.50 an ounce.

China, the world's second-largest gold producer last year, is expected to surpass South Africa and become the world's top producer in 2008 as it raises output from 270.5 tonnes to 300 tonnes this year.

In other precious metals, spot platinum fell to a two-week low $2,035.50/2,055.50 an ounce from $2,118/2,138 late in New York on Tuesday.

Platinum futures in Japan also declined sharply, with the most active April contract falling a daily-limit of 300 yen and settling at the day's low of 6,740 yen.

The metal's major industrial use is in catalysts, particularly in diesel catalysis, to help clean environmentally damaging fumes from motor exhausts.

''We still expect dips to be viewed as buying opportunities, given the tight market fundamentals and likelihood of further investment demand/supply disruptions,'' James Moore, precious metals analyst at TheBullionDesk.com, said.

Silver fell as low as $17.09 an ounce and was last quoted at $17.22/17.27, versus $17.41/17.47 late on Tuesday. Palladium was at $433/$438 an ounce, down from $436.50/444.50.

UNI SBA AS1750 ,118/2,138 late in New York on Tuesday.

Platinum futures in Japan also declined sharply, with the most active April contract falling a daily-limit of 300 yen and settling at the day's low of 6,740 yen.

The metal's major industrial use is in catalysts, particularly in diesel catalysis, to help clean environmentally damaging fumes from motor exhausts.

''We still expect dips to be viewed as buying opportunities, given the tight market fundamentals and likelihood of further investment demand/supply disruptions,'' James Moore, precious metals analyst at TheBullionDesk.com, said.

Silver fell as low as .09 an ounce and was last quoted at .22/17.27, versus .41/17.47 late on Tuesday. Palladium was at 3/8 an ounce, down from 6.50/444.50.

UNI SBA AS1750

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