Gold declined from an 11-week high as crude oil dropped, reducing the precious metal’s appeal as a hedge against inflation. Futures in Tokyo marked their first annual decline in nine years. Crude oil fell on concerns about a deepening recession, after gaining 13 percent in the past two days on speculation conflict between Israel and Hamas in the Gaza Strip may result in supply disruptions in the Middle East. Tokyo gold futures fell 16 percent this year, the biggest annual drop since 1983, as the yen headed for its biggest annual gain in 19 years. “The Israel-Hamas tension continued lending support to gold,” Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd. in Tokyo, said today by phone. “But we may see some technical selling and year-end book squaring after the recent gain.” Bullion for immediate delivery fell 0.6 percent to $875.11 an ounce at 2:15 p.m. in Singapore. Gold traded as high as $890.49 yesterday, the highest since Oct. 10. The price reached a record $1,032.70 an ounce in March. Silver for immediate delivery declined 0.3 percent to $10.865 an ounce. Israel hinted it was ready to broaden its assault on Gaza with a ground operation after three days of air raids failed to bring an end to cross-border rocket attacks. Investors in the Middle East are the second-biggest buyers of gold bars, purchasing 46.8 metric tons in 2007, according to GFMS Ltd. February-delivery gold was little changed at $875.40 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange. Tokyo Close December-delivery gold on the Tokyo Commodity Exchange closed down 0.3 percent at 2,573 yen per gram ($885 an ounce). The price reached 3,363 yen in July. Futures trading on the Tokyo exchange ended at 11 a.m. local time today and will resume Jan. 5. Tokyo gold and platinum futures came under pressure this year after spot market prices dropped from record highs and the yen strengthened, Mitsubishi’s Sugata said. The yen gained 19 percent against the dollar this year and is heading for the biggest annual advance since 1979. The dollar touched 87.14 yen on Dec. 17, the lowest since July 1995, reducing the value of yen-based futures contracts. It last traded at 90.11 yen. Platinum for delivery in December on the Tokyo exchange ended 7 yen down at 2,652 yen a gram. It plunged 50 percent this year, the first annual decline in seven years, as demand from automakers collapsed. The contract reached a record 7,427 yen in March. Immediate-delivery platinum declined 1 percent to $909 an ounce at 2:06 p.m. Singapore time. The metal touched $935 yesterday, the highest since Oct. 16. Platinum, which reached an all-time high of $2,301.50 in March, is used in pollution-control devices in cars and trucks.

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