Gold may decline for a second day in London as a drop in oil prices curbs demand for an inflation hedge and as some investors sell the metal to cover losses in other assets including equities. Oil fell to its lowest price in almost four months in New York on concern the Greek debt crisis will threaten Europe’s economic recovery. The MSCI All-Country World Index of equities earlier today fell to a three-month low. Gold is trading 3.2 percent below its record reached last month. “If crude oil declines, it may imply less inflation pressures,” Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. “You cannot rule out that some investors also sell gold to cover losses in other assets.” Immediate-delivery gold declined $2.55, or 0.2 percent, to $1,527.25 an ounce by 11:42 a.m. in London. The metal is down 0.3 percent this week. Gold for August delivery was down 0.1 percent at $1,527.80 an ounce on the Comex in New York. Bullion rose to $1,526.25 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,523.25 at yesterday’s afternoon fixing. The metal pared some of its losses after the euro rebounded against the dollar. Gold typically moves counter to the greenback. Greece’s Prime Minister George Papandreou is struggling to gain parliamentary approval for a 78 billion-euro ($110.3 billion), five-year package of budget cuts and asset sales by July to ensure the nation receives a new European Union aid package to avoid the euro-area’s first default. Chancellor Angela Merkel signaled a willingness to compromise on German demands that bondholders shoulder a “substantial” share of a Greek rescue, saying she’ll work with the European Central Bank to resolve the crisis. Greek Default Outlook A Greek default is “almost certain” and could help drive the U.S. economy into recession, Former Federal Reserve Chairman Alan Greenspan said in an interview yesterday with Charlie Rose in New York. Gold is up 7.5 percent in 2011 after climbing the past 10 years, the longest run of gains in at least nine decades. Europe’s debt crisis helped bullion reach a record $1,577.57 on May 2. Fifteen of 23 traders, investors and analysts surveyed by Bloomberg said gold will rise next week. Five expect lower prices and three were neutral. The dip may be a good buying opportunity as the Greek debt crisis “shows no signs of ending,” said Hwang Il Doo, a Seoul- based senior trader at KEB Futures Co. Silver for immediate delivery dropped 0.6 percent to $35.3337 an ounce in London. Palladium fell 0.8 percent to $751.50 an ounce. Platinum was down 0.7 percent at $1,746.25 an ounce, after falling to $1,741.10, the lowest level since May 23. To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Kyoungwha Kim in Singapore at kkim19@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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