Oct. 28 (Bloomberg) -- Gold declined to a three-week low in New York and London on speculation that a rebounding dollar will curb demand for the precious metal as an alternative investment. The Dollar Index, a six-currency gauge of the greenback’s performance, added 0.2 percent after four days of gains. The measure slipped to a 14-month low on Oct. 21. Gold futures, which often move inversely to the dollar, have slid 3.7 percent since touching an all-time high of $1,072 an ounce on Oct. 14. “We could well be in for a surprise if the negative dollar sentiment turns,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report. “Bullion is trading against risk aversion. The dollar is still a preferred safe-haven asset, to a certain extent.” December gold futures lost $3.40, or 0.3 percent, to $1,032 an ounce on the New York Mercantile Exchange’s Comex division by 8:23 a.m. local time. The metal slipped as low as $1,030.80, the lowest price since Oct. 6. Immediate-delivery bullion slumped 0.7 percent to $1,032.50 in London. The metal dropped to $1,035.50 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $1,036.50 at yesterday’s afternoon fixing. Spot prices are up 17 percent this year and heading for a ninth consecutive annual increase, the best run since at least 1948. ‘Much-Needed Correction’ “Gold technically seems to be exhausted,” Pradeep Unni, a Richcomm Global Services analyst in Dubai, said in a report. “The much-needed correction is on the way. Anticipation of continued selling pressure is keeping buyers at bay.” Hedge funds and other large speculators trimmed net-long positions, or bets on higher prices, in gold futures by 2 percent as of Oct. 20 from a record the previous week, Commodity Futures Trading Commission data show. Miners, producers and commercial users increased their net-short positions. Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell 1.22 metric tons to 1,105.65 tons yesterday. The fund’s holdings reached a record 1,134 tons on June 1. All of the six main industrial metals traded on the London Metal Exchange dropped today, while the MSCI World Index of shares slid for a seventh session. Silver for December delivery in New York fell 1.1 percent to $16.365 an ounce. Platinum for January delivery dropped 0.4 percent to $1,314 an ounce, while palladium for December delivery was 1.7 percent lower at $324.80 an ounce. Industrial Demand “Platinum, palladium and silver depend not only upon speculative purchases, they depend too upon industrial offtake, and it is the latter that has them depressed this morning,” wrote Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter. Platinum and palladium are used in automotive pollution- control gear. Silver, often associated with photography and jewelry, is used in industrial products from chemical catalysts to ball bearings, according to the Silver Institute. Palladium held in ETF Securities Ltd.’s exchange-traded products rose 2.2 percent to a record 575,026 ounces yesterday, according to the company’s Web site. Platinum holdings increased 1.6 percent to 389,748 ounces. To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Kyoungwha Kim in Singapore at kkim19@bloomberg.net

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