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As oil gets cheap, gold loses its lustre as an inflation hedge

Talk turns to deflation and investors trade out of gold funds, although speculators remain bullish

While dollar-denominated gold is down this year, bullion is up 12 per cent priced in yen and 9.6 per cent in euros. Gold climbed 70 per cent from December 2008 to June 2011, before prices slumped 28 per cent last year.

New York

GOLD, the ultimate inflation hedge, isn't much use to investors these days.

Oil is in a bear-market freefall that began in June, spearheading the longest commodity slump in at least a generation. The collapse means that instead of the surge in consumer prices that gold