Gold Declines as Dollar Strengthens Against Euro; Silver Rises

By Pham-Duy Nguyen

Aug. 26 (Bloomberg) -- Gold fell as the dollar strengthened against the euro, eroding the appeal of the precious metal as an alternative investment. Silver rose.

The euro fell as much as 1.2 percent against the dollar after rising 0.7 percent last week. Gold generally moves in tandem with the euro as an alternative to the U.S. currency. The metal reached a record in March as the euro headed to an all-time high against the dollar.

``Gold's movement is focused on the dollar,'' said Stephen Platt, commodity analyst at Archer Financial Services Inc. in Chicago. ``As long as the dollar remains strong, gold is going to have trouble attracting substantial investment buying.''

Gold futures for December delivery fell $5.50, or 0.7 percent, to $820.20 an ounce at 9:19 a.m. on the Comex division of the New York Mercantile Exchange. The metal fell 0.9 percent yesterday after rallying 5.2 percent last week.

Silver futures for December delivery rose 5.6 cents, or 0.4 percent, to $13.535 an ounce on the Comex. Before today, silver dropped 9.7 percent this year while gold fell 1.5 percent.

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.