Gold fell, erasing earlier gains, on speculation a global slowdown will erode demand for all commodities. Silver also declined. The U.S. Senate is weighing an economic stimulus package that the House passed last week. The housing market lost $3.3 trillion in value in 2008, according to Zillow.com, and a record 19 million U.S. homes were vacant at the end of the year as banks seized homes, the Census Bureau said. Gold’s gains in 2008 were the smallest since 2004. “The reality is we’re still stuck in a deflationary mode,” said Tom Hartmann, a commodity analyst at Altavest Worldwide Trading Inc. in Mission Viejo, California. “There’s potential inflation in the future that will help gold, but right now we’re just seeing worsening economic conditions.” Gold futures for April delivery fell $15.50, or 1.7 percent, to $891.70 an ounce at 12:04 p.m. on the New York Mercantile Exchange’s Comex division. Earlier the price reached $914.30. Silver futures for March delivery fell 23.5 cents, or 1.9 percent, to $12.18 an ounce. The metal slumped 24 percent in 2008 while gold gained 5.5 percent.

Source