Gold Slides With World Markets

Oil is viewed as a primary driver of inflation, and some investors buy gold as a hedge against a generally rising price level. So when oil dips, gold sometimes follows suit. Crude futures were recently off about 2% in late-session trading at $60 a barrel.

Also out in early trading was a report showing a weaker-than-expected services sector in the U.S, as measured by the Institute for Supply Management's nonmanufacturing index. However, in the grand scheme of things, the data were still robust.

"Inventory sentiment [a forward-looking measure] and new export orders provide an indication of the solid underlying condition of the service sector," writes Joe Brusuelas, chief U.S. economist at IDEAglobal in New York.

Foreign exchange dealers gave a mixed reaction. The dollar was buying 115.827 yen, down from 116.85 yen late Friday. The euro was buying $1.3094, down from $1.3194 previously. The price of gold and the dollar tend to move in opposite directions.

Among the miners, CIBC World Markets dinged shares of Meridian Gold(MDG Quote) with a downgrade to sector underperform from sector perform. The shares were recently lower by 1.3%.

Elsewhere, the Philadelphia Gold and Silver Index was drooping 1.2%. Bucking the sector's softness were shares of Royal Gold(RGLD Quote), up 1% recently.

As for base metals, copper closed 4 cents lower, at $2.67 a pound on the Comex.