By Millie Munshi
Dec. 4 (Bloomberg) -- Gold prices rose, reversing an earlier decline, after the dollar pared earlier gains, renewing demand for the precious metal as an alternative investment.
The U.S. Dollar Index, which gauges the greenback against six counterparts, was little changed at 87.003 after earlier adding as much as 0.8 percent. Gold often moves in the opposite direction of the dollar. Before today, the metal dropped 8.1 percent this year as the dollar index gained 13 percent.
“The reason that gold jumped is that the dollar came back down from its highest levels,” said Donald Selkin, the chief market strategist at National Securities Corp. in New York.
Gold futures for February delivery gained $1.60, or 0.2 percent, to $772.10 an ounce at 10:34 a.m. on the Comex division of the New York Mercantile Exchange. The metal lost 1.6 percent yesterday.
Earlier, gold fell as much as 1 percent, in line with the stock market, amid speculation the global economic slump will deepen, said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago.
Equities in Asia, Europe and the U.S. declined today on speculation the global recession will reduce company earnings.
Silver futures for March delivery lost 9 cents, or 0.9 percent, to $9.50 an ounce on the Comex.
To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net.
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