By Nicholas Larkin and Kim Kyoungwha Nov. 5 (Bloomberg) -- Gold fell for the first time in four days in London as the dollar climbed, curbing demand for the metal as an alternative investment, and as some investors sold bullion following its rally to a record. Bullion, up 23 percent this year, gained to a record $1,097.72 an ounce yesterday after the Federal Reserve pledged to keep borrowing costs low for an “extended period,” weakening the dollar. The Dollar Index added 0.4 percent today. Gold also climbed this week as the Reserve Bank of India said it bought 200 metric tons from the International Monetary Fund. “There’s been some profit-taking, and there’s a rebound in the dollar,” said Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. “I don’t see a substantial rebound in the dollar. Gold will still have a chance to move higher.” Gold for immediate delivery lost as much as $8, or 0.7 percent, to $1,084.20 an ounce and was at $1,088.61 by 11 a.m. local time. December gold futures were little changed at $1,088.80 an ounce on the New York Mercantile Exchange’s Comex division. The metal slipped to $1,088 in the morning “fixing” in London, used by some mining companies to sell production, from $1,090 at yesterday’s afternoon fixing. “I don’t think this weakness will trigger a very big correction,” said Kate Harada, a senior trader with Mitsubishi Corp. Futures & Securities Ltd. in Tokyo. Ninth Full-Year Gain The precious metal is set for a ninth annual gain as the Dollar Index, which measures the greenback’s performance against the euro and five other currencies, has fallen 6.8 percent. The measure slipped 1 percent yesterday after the Fed kept the target rate for overnight bank lending at zero to 0.25 percent. “Gold’s support level is at $980 per ounce,” said Aaron Smith, managing director of Superfund Financial Singapore Pte. “However, any dips in prices will incite buying activity.” Smith forecast last month that gold would rise to $2,000 an ounce in the next three years, citing “massive” inflation. The Indian central bank’s purchase from the IMF was made last month at an average price of $1,045 an ounce, and the $6.7 billion acquisition increased its holdings to about 557.7 tons. The IMF agreed in September to sell 403.3 tons to shore up its finances and provide more low-interest loans. Investors Return “Despite the prevailing high price level, central banks from emerging economies are still willing to accumulate gold to diversify their currency reserves,” Eugen Weinberg, a senior analyst with Commerzbank AG, wrote in a note. “Investors who had previously given gold the cold shoulder are now returning to the market on the news of India’s gold purchase.” Prices may climb as high as $1,300 an ounce should inflation concerns increase in the next year, Weinberg said in a Bloomberg Television interview today. “At $1,100, gold is definitely not in a bubble yet,” he said. Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, were unchanged at 1,108.4 metric tons yesterday, its Web site showed. Assets increased the previous day by the most in almost a month. Gold held in ETF Securities Ltd.’s exchange-traded products slipped 1.4 percent to 7.838 million ounces yesterday, its Web site showed. Among other precious metals for immediate delivery in London, silver fell 0.4 percent to $17.38 an ounce. Platinum lost 0.7 percent to $1,358 an ounce, and palladium was up 0.4 percent at $330.75 an ounce. ETF Securities’ silver holdings added 0.1 percent to a record 21.438 million ounces yesterday, while palladium assets increased 0.1 percent to a record 580,762 ounces, its Web site showed.

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