Gold dropped in London as a global economic slowdown and lower oil prices threaten to reduce demand for the metal in jewelry and as a hedge against inflation. Gold fell as crude was poised for its first annual decline in seven years amid recessions in the U.S., Germany and Japan. Purchases from jewelers have slid in the first quarter every year since at least 2001, according to London-based research company GFMS Ltd. In India, the biggest buyer, demand usually peaks in the second half for occasions such as the wedding season. “Clearly if the negative economic news gets worse and worse, then commodity prices would come under more pressure.” said Gerry Celaya, chief strategist at RedTower Inc. in Aberdeen, Scotland. “India is at the tail end of the wedding season and in terms of China and the U.S., you’d have to think demand would be less given what’s going on in economies.” Gold for immediate delivery fell $10.29, or 1.2 percent, to $870.01 an ounce as of 9:18 a.m. in London. The metal may decline to $660 an ounce by this time next year, Celaya said. Prices are still up 4.4 percent this year on investor demand. Investment in the SPDR Gold Trust, the largest exchange- traded fund of gold, rose to a record 780.23 tons yesterday from 775.33 tons on Dec. 26. The fund has more gold than Japan’s central bank. Jewelers will account for 58 percent of global demand this year, down from 61 percent last year, according to GFMS. Gold for February delivery dropped $4.60 to $870.70 an ounce on the Comex division of the New York Mercantile Exchange. Platinum fell $9.25, or 1 percent, to $908.75 an ounce and palladium declined $5, or 2.7 percent, to $183 an ounce. Silver dropped 13 cents, or 1.2 percent, to $10.77 an ounce.

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