By Jae Hur
Jan. 7 (Bloomberg) -- Gold dropped as the dollar strengthened to a three-week high against the euro, reducing the appeal of the precious metal as an alternative investment.
Bullion fell as the dollar gained for a fourth day before a European Union report forecast to show declining producer prices, boosting the case for the European Central Bank to cut interest rates. Gold has fallen 2.8 percent this month, while the dollar has risen 4 percent.
“The dollar’s strength put pressure on bullion and other commodities,” said Hiroaki Hama, an analyst at Mizuho Corporate Bank Ltd. in Tokyo.
Gold for immediate delivery fell 0.7 percent to $857.54 an ounce at 10:18 a.m. in Tokyo. Silver for immediate delivery declined 1.2 percent to $11.34 an ounce after gaining 2 percent yesterday.
Spot gold advanced 5.8 percent last year, a record eighth annual advance, while silver fell 23 percent, its worst performance since 1984, and platinum plunged 39 percent, the steepest drop since at least 1988.
February-delivery gold dropped 0.7 percent to $859.90 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.
The euro traded at $1.3501 at 8:42 a.m. in Tokyo from $1.3536 late yesterday in New York, when it touched $1.3313, the lowest level since Dec. 12.
December-delivery gold on the Tokyo Commodity Exchange gained 2 percent to 2,594 yen per gram ($861 an ounce). December-delivery platinum rose 3.4 percent to 2,922 yen a gram.
Immediate-delivery platinum added 0.3 percent to $970.50 an ounce, gaining for a fifth day. The metal is used in pollution- control devices in cars and trucks.
To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net
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