By Nicholas Larkin Nov. 19 (Bloomberg) -- Gold fell in London as a drop in oil reduced the appeal of the metal as a hedge against inflation. Crude oil slid for a fourth day on anticipation that U.S. inventories rose last week. Prices paid to U.S. producers plunged in October by the most on record, a report showed yesterday. U.K. inflation also slowed the most in more than a decade. Lower oil prices ``could put gold under pressure,'' Narayan Gopalakrishnan, a Geneva-based trader at MKS Finance, one of Switzerland's four bullion refiners, said by phone today. ``People are reluctant to put their money into anything.'' Gold for immediate delivery lost $1.21, or 0.2 percent, to $736.95 an ounce by 11:55 a.m. in London. December futures were $3.90, or 0.5 percent, higher at $736.60 in electronic trading on the Comex division of the New York Mercantile Exchange. The metal fell to $737.75 in the morning ``fixing'' in London used by some mining companies to sell production, from $738 at the previous afternoon fixing. Oil dropped as much as 2 percent to $53.30 and last traded at $54.20 a barrel in New York. The U.S. dollar, little changed today, headed for a third weekly gain against a basket of six major counterparts, reducing the lure of gold as a hedge against weakness in the currency. The index reached 88.147 on Nov. 13, the highest since April 2006. ``Until we see some decent move in the dollar, we're not going to see a big move in gold,'' Walter de Wet, an analyst at Standard Bank Ltd. in Johannesburg, said by phone. ``On a three- month basis we expect more dollar strength.'' Platinum Drops Platinum fell $6 to $830 an ounce. Lonmin Plc, the world's third-largest producer, yesterday said it will cut output and Johnson Matthey Plc forecast a global supply shortfall of 240,000 ounces this year because of mining disruptions. The metal has fallen ``too much'' on the global recession, particularly compared with gold, and some investors may sell bullion and buy platinum, Hiroyuki Kikukawa, general manager of research at IDO Securities Co., said in Tokyo. ``Platinum and palladium look set for a strong medium-term performance'' if European car demand and Chinese jewelry demand increase and if South African mining problems continue, John Reade, an analyst at UBS AG in London, wrote in a note today. Silver fell 1.8 percent to $9.48 an ounce and palladium was 75 cents, or 0.3 percent lower, at $216.75 an ounce. To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

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