Precious metal loses lustre

SEATTLE - Gold's appeal is fading as slumping commodity prices reduce the attraction of the precious metal as a hedge against inflation.

The percentage of traders expecting a drop in prices has increased to 46 per cent, the most since July, based on a survey of 39 traders, investors and analysts from Sydney to Chicago contacted by Bloomberg News. The percentage was 6.5 per cent a week earlier. Seventeen respondents, or 44 per cent, said to buy gold this week, and five were neutral.

Gold has plunged 20 per cent from a 26-year high of US$732 an ounce on May 12 on signs that two years of interest-rate increases by the Federal Reserve will slow growth and curb inflation. Prices touched US$563.50 on October 4, the lowest since June 15.

- BLOOMBERG