November 28, 2014 / 3:25 AM / 5 years ago

PRECIOUS-Gold extends losses to third day as oil slumps

(Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Nov 28 (Reuters) - Gold extended losses into a
third session on Friday, dropping to a one-week low, on
expectations that plunging oil prices could sap inflationary
pressure, curbing the metal's appeal as a hedge.
    Oil hit four-year lows around $70 a barrel, as OPEC resisted
the temptation to cut back production following a more than 30
percent plunge in prices since June. 
    The drop in oil prices, along with the resulting strength in
the dollar, hurt gold which is often seen as a hedge.
    "Precious metals declined as lower oil prices prompted
concerns about deflation," said ANZ analyst Victor Thianpiriya.
    Spot gold had fallen 0.3 percent to $1,187.40 an
ounce by 0741 GMT. It hit $1,181.30 earlier in the session - its
lowest since Nov. 20. 
    The metal has lost over 1 percent for the week, snapping a
three-week rally.
    U.S. gold futures slid 1 percent to a session low of
    The dollar index held firm, having made notable gains
versus oil-related currencies, the Canadian dollar and Norwegian
crown in the previous session. 
    "Gold sympathized with oil but I think there is a limit to
the downward slide and we might hold $1,180 for now," said a
trader in Tokyo, adding that the market was also eyeing the
Swiss vote on central bank reserves on Sunday.
    The vote is aimed at preventing the Swiss National Bank from
offloading its gold holdings and obliging it to hold at least 20
percent of its assets in gold, compared with 8 percent last
    The most-recent opinion poll showed support among Swiss
voters for the initiative had slipped to 38 percent.
    A surprise 'yes' vote, however, could prompt the Swiss
central bank to buy about 1,500 tonnes of gold over the next few
years, boosting bullion prices, analysts say. 
    "Most people in the market are already expecting a 'no' in
the Swiss vote but it might still cause some sell-off. A 'yes'
vote is unlikely but if it happens, we can see a jump in
prices," the Tokyo-based trader said.
    Among other precious metals, silver futures slid 3
percent. Platinum is down 1 percent for the week on
outflows from the metal-backed exchange-traded funds. 
    Palladium was headed for a second weekly gain.
    PRICES AT 0741 GMT
 Metal            Last      Change   Pct chg
 Spot gold          1187.4    -3.85     -0.32
 Spot silver          16.1    -0.11     -0.68
 Spot platinum     1213.65     1.65      0.14
 Spot palladium      799.7     -4.6     -0.57
 Comex gold         1186.2    -10.4     -0.87
 Comex silver        16.09   -0.458     -2.77
 Euro               1.2461                   
 DXY                88.054                   
 COMEX gold and silver contracts show the
 most active months
 (Reporting by A. Ananthalakshmi; Editing by Joseph Radford,
Anupama Dwivedi and Prateek Chatterjee)
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