Gold, little changed in London, may drop on lower demand for an inflation hedge after U.S. consumer prices posted their first annual decline since 1955. The consumer price index fell 0.4 percent in March from a year earlier, the Labor Department said yesterday. That helped to ease concern that Federal Reserve actions to stimulate the economy will cause inflation to soar. Investors often buy gold as a hedge against accelerating prices. Rhodium climbed to the highest in more than four months on improved car sales. Investor inflows into gold “seem to have just leveled off,” said Dan Smith, an analyst at Standard Chartered Plc in London. Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, remained unchanged from the record 1,127.68 metric tons reached on April 9. Bullion for immediate delivery lost $1.04, or 0.1 percent, to $890.01 an ounce at 11:13 a.m. local time. Gold rose as high as $902.84 yesterday, the highest intraday price since April 3. June gold futures dropped 0.3 percent to $891 an ounce on the New York Mercantile Exchange’s Comex division. The metal fell $3.25 to $889 an ounce in the morning “fixing,” used by some mining companies to sell production, from yesterday’s afternoon fixing. Gold moved between gains and losses along with the Dollar Index, which tracks the currency against the euro and five other monies. Bullion and the dollar tend to move inversely. “Gold is just sitting there,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said by telephone. “We are waiting for a major move in the dollar, which has also been sitting idle.” Inflation Concern Bullion has added as much as 13 percent this year on concern about potential future inflation as governments and central banks spend trillions of dollars in an effort to ease the world economic slump. The Fed has doubled its balance sheet to more than $2 trillion. “We have seen a decrease in CPI, but more importantly for gold, this massive stimulus and infrastructure spending in the U.S. is creating a huge precedent for dollar inflation,” Kryuchenkov said. “Things look rosy in the long run” for gold. DWS Investments GmbH, the mutual-fund unit of Deutsche Bank AG, has seen assets in its gold fund expand 50 percent this year. “There is an expectation of inflation, and gold has been bought in advance,” Stephan Werner, who helps manage the fund, said April 13. Platinum lost $3.75, or 0.3 percent, to $1,218.75 an ounce, cutting this year’s gain to 30 percent. Rhodium gained $50, or 3.9 percent, to $1,350 an ounce, the highest since Dec. 4, according to prices from Johnson Matthey Plc on Bloomberg. Both metals are used in autocatalysts. Auto Sales “There has been quite a bit of interest in platinum as well as rhodium,” Standard Chartered’s Smith said. “There has been a modest upturn in the automotive sector. We saw quite a big jump in car sales in Germany and an improvement in China.” German car sales rose 40 percent in March to the highest since 1992, the country’s VDA auto association said April 2. News that Chinese passenger-car sales rose to a record in March helped platinum to climb to a six-month high of $1,252 an ounce on April 13 and last week gain 4.6 percent, the most in four weeks. Platinum slid 39 percent last year as the global slump cut into vehicle sales, forcing General Motors Corp. and other carmakers to seek government aid. Investors expect that the industry will hit bottom soon and restocking of rhodium is under way, Smith said. Silver for immediate delivery fell 0.6 percent to $12.72 an ounce. Palladium slipped 0.2 percent to $237 an ounce.

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