Gold Hits Two-Month Low as Dollar Rises, Silver Falls

Gold dropped below $910 Wednesday as a firmer U.S. dollar pressured the yellow metal to a two-month low. Silver and platinum were hit even harder while oil tumbled to its own seven-week low. U.S. stocks rallied late to post slight gains.

In New York trading futures for bullion:

• Silver for September delivery dropped 36.8 cents, or 2.8 percent, to 12.852 an ounce.

• Gold for August delivery fell $19.80, or 2.1 percent, to $909.30 an ounce — the lowest for a most-active contract since May 5.

• October platinum declined $34.00, or 3.0 percent, to $1,101.80 an ounce.

Notable precious metal quotes on the day follow:

"A major slide in crude oil prices aggravated bullion’s condition and the metal fell hard despite obvious safe-haven flows into…the yen today — and not the US dollar," wrote Jon Nadler, senior analyst at Kitco Inc. "The $880 to $900 area might come into the focus of players next."

"The dollar’s recent stability, coupled with an impressive crude-oil decline in the past several days, has gold bulls on the defensive," Ralph Preston, a Heritage West Futures Inc. commodity analyst in San Diego, was quoted on Bloomberg. "I have a very specific trade recommendation to short the gold market on today’s break of $915 support."

In London bullion, the benchmark gold price was fixed earlier in the day to $918.00 an ounce, a $6.00 decline. Silver gave back most of Tuesday’s 29 cent gain to fall 27 cents to $13.05 an ounce. Platinum was fixed $33.00 lower to $1,110.00.

Gold, considered a hedge during times of high inflation and economic uncertainty, tends to follow oil and move opposite to the U.S. dollar. A rising greenback makes dollar-denominated commodities, like bullion, more expensive for holders of other world currencies.

Oil and gasoline prices

Oil plunged for the sixth straight session and to a seven-week low on Wednesday after the Energy Information Administration reported inventories last week were higher and consumption plummeted.

New York crude-oil for August delivery fell $2.79, or 4.4 percent, to close at $60.140 a barrel.

Prices at the pump followed the decline, according to AAA. The national average for unleaded gasoline fell 1.1 cents to $2.593 a gallon. The price is: 3.7 cents below last week, 2.6 down from a month back, and $1.52 lower than a year ago.

U.S. Stocks

U.S. stocks rallied late with worries over a slower than expected economic recovery cited for earlier day weakness. The Dow Jones industrial average gained 14.81 points, or 0.18 percent, to 8,178.41. The S&P 500 Index fell 1.47 points, or 0.17 percent, to 879.56. The Nasdaq Composite Index rose 1.00 points, or 0.06 percent, to 1,747.17.

Check out additional market resources at Live Bullion Spots, the Silver Calculator, U.S. Mint Collector Bullion Price Guide, and the Inflation Calculator.