Gold tumbled the most in four weeks after a drop in energy costs reduced demand for the precious metal as a hedge against inflation. Silver also fell. Crude-oil futures in New York have plunged almost 6 percent in two days after the International Monetary Fund cut growth estimates for Japan and the U.S. Gold rose to a record of $1,478 an ounce yesterday as tensions in Libya, Japan’s nuclear crisis and concern that Europe’s debt crisis will spread boosted demand for an investment haven. “Seeing the oil market come down has taken some of the wind out of the inflationary forces that drove commodities to records,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago. “Some of the inflationary trade has come out of the metals.” Gold futures for June delivery fell $15, or 1 percent, to $1,453.10 at 11:45 a.m. on the Comex in New York, heading for the biggest drop since March 15. Yesterday, the metal slid 0.4 percent. Before today, the price gained 26 percent in the past 12 months. Crude-oil futures dropped as much as 3.9 percent today. Yesterday, futures declined 2.5 percent after touching a 30- month high of $113.46 a barrel. “Gold and silver are getting dragged down by crude,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “Crude is making a deflationary run.” German investor confidence fell more than economists forecast in April after the European Central Bank raised interest rates to curb inflation, the ZEW Center for European Economic Research in Mannheim said today. ‘Inflation Fears’ Japan increased the severity rating of its nuclear crisis to the highest level, matching the Chernobyl disaster in 1986. “A lowered outlook for growth has led many to conclude that inflation fears are unwarranted, thereby reducing demand for precious metals as a hedge,” Marc Ground, an analyst at Standard Bank Plc in Johannesburg, said today in a report. Silver futures for May delivery fell 59.2 cents, or 1.5 percent, to $40.02 an ounce on the Comex. Yesterday, the price reached $41.975, the highest since January 1980, when the metal touched a record $50.35. The commodity has more than doubled in the past year. Palladium futures for June delivery fell $15.40, or 2 percent, to $772.85 an ounce on the New York Mercantile Exchange. Platinum futures for July delivery declined $11.40, or 0.6 percent, to $1,781.40 an ounce. To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net. To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.

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