Low demand spurs decline in gold prices

Gold fell for a third day in Asia as the dollar advanced against the euro, reducing demand for the precious metal as a store of value. The fall in gold prices also came amid easing inflation fears as oil prices weakened.

Gold has been hurt by the dollar's strength as investors have recently preferred the US currency to bullion as a safe store of value amid fears over the economic outlook.

Declining oil prices on growing uncertainty over an economic recovery eased worries about inflation, hurting gold which is widely perceived as a hedge against rising prices. But traders expected buying from major consumers, including India and other Asian countries to resume when prices fall further, limiting the market's downside. Bullion has dropped 1.1 per cent this week.

Gold for immediate delivery lost as much as 0.6 per cent to $919.20 an ounce, the lowest since June 23, and traded at $919.45 an ounce earlier in Singapore.

Bullion also tracked declines in other commodities. Oil slid to a six-week low as equities slumped, raising speculation a slower-than-expected economic recovery will curb raw materials consumption. "All commodities are being affected by the firmer dollar," said Pan Jinghua, an analyst at Shanghai Jinpeng International Futures.

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