Gold Falls as Dollar Strengthens Against Euro; Silver Declines

By Pham-Duy Nguyen

Aug. 22 (Bloomberg) -- Gold fell after the dollar rebounded against the euro, eroding the appeal of the precious metal as an alternative investment. Silver also declined.

The dollar gained as much as 0.7 percent against the euro after dropping 1 percent yesterday. Gold generally moves in tandem with the euro as an alternative to the U.S. currency. The metal and the euro are still headed for the first weekly gains in six.

``It doesn't help gold when the dollar bounces back,'' said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. ``People will look to sell gold on rallies.''

Gold futures for December delivery fell $9.30, or 1.1 percent, to $829.70 an ounce at 9:31 a.m. on the Comex division of the New York Mercantile Exchange. The metal is up 4.7 percent this week after dropping 18 percent in the previous five weeks.

Silver futures for December delivery slipped 43.5 cents, or 3.1 percent, to $13.465 an ounce on the Comex. Before today, silver had fallen 6.8 percent this year while gold had gained 0.1 percent.

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