Aditi (Junior Manager At MCXBABA.COM)Crude prices in New York and London have plunged to five-year lows and are more than 40 percent below their 2014 peaks in June, boosting concern that inflation will stay low and limit gold’s appeal as a hedge. Holdings in the SPDR Gold Trust, the largest exchange-traded product backed by bullion, was unchanged yesterday after climbing to the highest in a week on Dec. 19. The Federal Reserve pledged last week to be patient on the timing for higher rates.
“Oil market weakness is a significant weight on bullion and may very well cap rallies,” James Steel, an analyst at HSBC Securities (USA) Inc., said in a note. The “drop may encourage price-sensitive emerging market buying, notably from China. This should help define the bottom of the market.”