Gold futures fell Wednesday to below $850 an ounce, pacing losses in U.S. stocks and crude-oil futures, with the falling oil prices reducing the metal's appeal as a hedge against inflation. Limiting gold's losses, the U.S. dollar fell against its major rivals, increasing gold's attraction as an alternative to the greenback. Gold for February delivery was down $17, or 2%, at $849 an ounce in early trade on the Comex division of the New York Mercantile Exchange. Crude-oil futures were also down Wednesday, under pressure for a second session, data showed U.S. petroleum inventories increased more than expected last week. See Futures Movers. In currencies trading, the dollar index , which tracks the value of the greenback against a basket of other major currencies, fell 0.6%. U.S. stocks saw declines of their own Wednesday after a report pointed to further deterioration in the labor market. The Dow Jones Industrial Average dropped nearly 200 points in early morning trading. U.S. private-sector firms shed 693,000 jobs in December, far worse than expected, according to the ADP employment index compiled from a sampling of payrolls data. See Economic Report. And for all of 2008, companies announced a total of 1.2 million job reductions, the most since 2003 and 59% more than in 2007, according to outplacement firm Challenger Gray & Christmas. See full story on job losses. In spot trading, the London gold-fixing price -- a benchmark for gold traded directly between big institutions -- stood at $848.50.25 an ounce Wednesday afternoon local time, up 25 cents from Tuesday afternoon. Holdings in the SPDR Gold Trust, the largest exchange-traded gold fund, stood at 787.88 tons Tuesday, up 7.65 tons from a day earlier, according to the latest data from the fund. In other metals trading, March copper fell 4.8% to $1.5083 a pound, and March palladium lost 1.4% to $196 an ounce. Silver for March delivery dipped 4.5% to $10.94 an ounce. April platinum rose 1.6% to $983.50 an ounce. Earlier it rose to as high as $1,011.60.

Source