Oct. 22 (Bloomberg) -- Gold declined as a rebounding dollar eroded the metal’s appeal as an alternative investment and as some investors sold bullion following its recent rally. The U.S. Dollar Index, which tracks the greenback against six currencies, advanced as much as 0.7 percent after China’s economic growth trailed some economists’ estimates and speculation mounted the world’s third-largest economy will pare stimulus spending. The currency index yesterday dropped to the lowest level in 14 months. “Of course the dollar has an effect in the short term,” Jesper Dannesboe, a senior commodity strategist at Societe Generale SA in London, said today by phone. “Gold looks a bit tired, and the pace of the rally has weakened a lot. There’s a bit of profit-taking going on.” Immediate-delivery bullion lost as much as $5.85, or 0.6 percent, to $1,053.15 in London and was at $1,056.50 at 11:54 a.m. local time. December gold futures slid $7.40, or 0.7 percent, to $1,057.10 an ounce on the New York Mercantile Exchange’s Comex division. The metal increased to $1,054.75 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $1,053.75 at yesterday’s afternoon fixing. Futures and spot prices are heading for their ninth weekly gain in 10. “It’s been a dollar play for gold,” said Zhu Lv, research manager at Shanghai Tonglian Futures Co. “Gold has held well above $1,050 and is now back in consolidation mode.” $1,072 an Ounce Bullion futures have risen 19 percent this year as the dollar index has fallen 7.3 percent. Gold touched an all-time high of $1,072 an ounce in New York on Oct. 14. China’s gross domestic product expanded 8.9 percent in the third quarter, the nation’s statistics bureau said today. The median estimate among 34 economists surveyed by Bloomberg was for a 9 percent expansion. Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, declined by 1.22 metric tons to 1,108.09 tons yesterday, according to the company’s Web site. The fund’s holdings had been unchanged for nine days and reached an all-time high of 1,134 tons on June 1. Gold imports in India, the world’s biggest consumer, will be about 50 tons in the fourth quarter, compared with a quarterly average of 100 to 120 tons, Anjani Sinha, president of the Indian Bullion Market Association, said in an interview today. High prices have hurt demand, he said. Diwali Festival Sales in India typically reach their highest point during the Hindu festival of Diwali, which this year fell on Oct. 17, and the wedding season that follows. A rebound in demand will be “very difficult” unless the price declines to between $900 and $950 an ounce, Sinha said. Among other precious metals for immediate delivery in London, silver fell 0.9 percent to $17.535 an ounce. Platinum lost 0.3 percent to $1,359 an ounce, and palladium was 0.3 percent lower at $336.50 an ounce. Palladium held in ETF Securities Ltd.’s exchange-traded commodities products gained 1.6 percent to a record 553,581 ounces yesterday, according to the company’s Web site. To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net.

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