Gold Falls for Third Day After Dollar Gains, Crude Oil Falls

By Feiwen Rong

July 7 (Bloomberg) -- Gold fell for a third day in Asia as the dollar traded near the highest in one week against the euro and crude oil declined, eroding the appeal of the precious metal as a hedge against inflation.

The euro traded at $1.5660 against the dollar at 8:54 a.m. before a report today that economists forecast will show growth in German industrial production slowed in May. Crude oil fell $1.23 a barrel to $144.06 a barrel at the same time, down more than 1 percent from its record $145.85 on July 3.

Bullion for immediate delivery fell $2.75, or 0.3 percent, to $930.50 an ounce at 8:59 a.m. in Singapore. Silver was little changed at $18.06 an ounce.

``Fresh funds are expected to be coming from large speculators'' as some hedge funds start their new financial year and may ``increase volatility'' in the market, William Kwan, bullion director at Gold Capital Management Pte in Singapore, said in a report today.

Gold for August delivery fell 0.2 percent to $932.20 an ounce in after-hours electronic trading on Comex at 9 a.m. Singapore time.

``Comex gold is trying to establish an upward trending mode with bullish factors coming from higher inflation and a weak U.S. economy,'' Kwan said. ``Heavy resistance'' was met around the $935 to $950 range, he said.

Gold for June 2009 delivery fell 0.3 percent at 3,226 yen a gram ($939 an ounce) on the Tokyo Commodity Exchange at 10:04 a.m. local time.

To contact the reporter for this story: Feiwen Rong in Singapore at frong2@bloomberg.net