Gold declines on US stimulus speculation

The price of gold was lower in New York Monday on the possibility that the US stimulus package could be smaller than expected, cutting the amount by which it could boost inflation.

There were rumors that the package, to be voted on soon by Congress, could be anywhere from $39 billion to $120 billion less than originally discussed.

The worry is that stimulus spending by the government will create inflation, but if the government spends less, the chances are that inflation will not rise as much.

April gold dropped $21.50 to $892.80 per troy ounce in New York trade, while March silver was down 33 cents to $12.83 per troy ounce and April platinum was $8.40 lower to $994 per troy ounce.

Copper prices were mixed, with New York quotes for March contracts dropping 2 cents to $1.61 per pound on a one-day delay by US Treasury Secretary Timothy Geithner in announcing a plan to help the US financial sector recover from the current recession.

The delay made investors worry that the recession will go on longer than expected.

Three-month copper, however, added $20 to $3,560 per tonne on the London Metal Exchange.