Gold Falls for Fourth Day as Dollar’s Advance Erodes Demand

By Jae Hur

Jan. 6 (Bloomberg) -- Gold declined for a fourth day as the dollar rebounded, reducing the appeal of the precious metal as an alternative investment.

The dollar rose as much as 0.8 percent, extending yesterday’s gain to a three-week high against the euro on speculation that President-elect Barack Obama’s plan to cut taxes will help the U.S. recover from a recession faster than other countries. Gold and other precious metals generally move in the opposite direction to the dollar.

“Further strength in the U.S. dollar would suggest gold prices will erase more of the gains made in December,” said Toby Hassall, an analyst with Commodity Warrants Australia in Sydney. “The bias to gold prices looks skewed to the downside, barring a real and dramatic escalation of Middle East tensions.”

Gold for immediate delivery fell 0.8 percent to $852.66 an ounce at 2:12 p.m. in Tokyo after losing 1.8 percent yesterday. Silver for immediate delivery declined 1.6 percent to $11.08 an ounce after falling 2.7 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 0.6 percent to $852.70 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

Platinum ‘Cheap’

Immediate-delivery platinum declined 1.4 percent to $936 an ounce. The metal is used in pollution-control devices in cars and trucks.

“Platinum appears relatively cheaper than gold,” Hiroyuki Kikukawa, general manager of research at IDO Securities Co. in Tokyo, said today.

Crude oil for February delivery fell 1.2 percent to $48.22 a barrel at 2:12 p.m. Tokyo time, losing for the first time in four sessions. The dollar last traded at $1.3546 per euro from $1.3635 late in New York yesterday. The U.S. currency earlier traded as high as $1.3529, the highest since Dec. 15.

December-delivery gold on the Tokyo Commodity Exchange fell 1.4 percent to 2,558 yen per gram ($855 an ounce). December- delivery platinum rose 1 percent to 2,794 yen a gram.

To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net