By Nicholas Larkin and Glenys Sim Nov. 20 (Bloomberg) -- Gold dropped in New York and London as a rebounding dollar curbed demand for bullion as an alternative investment. Other precious metals slipped. The dollar gained as much as 0.8 percent against the euro as European Central Bank President Jean-Claude Trichet said in Frankfurt that “it’s too early to declare the crisis over.” Bullion typically moves inversely to the dollar and rose to a record $1,153.40 an ounce on Nov. 18. The metal is up 2 percent this week, heading for a third weekly gain. Gold is “showing signs of fatigue after an impressive rally in the past few weeks,” James Moore, an analyst at TheBullionDesk.com in London, said in a report. “We will be looking to the dollar for further direction, with strength in the greenback likely to trigger profit-taking in gold.” Gold futures for December delivery on the New York Mercantile Exchange’s Comex division fell $3.40, or 0.3 percent, to $1,138.50 an ounce by 8:29 a.m. local time. Gold for immediate delivery dropped 0.5 percent to $1,138.48 in London. The metal increased to $1,142.50 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $1,135.50 at yesterday’s afternoon fixing. Spot prices have climbed 29 percent this year as the dollar lost 5.7 percent against the euro. “Sentiment remains bullish, and we would be very careful about shorting gold at the moment,” Andrey Kryuchenkov, a VTB Capital analyst in London, said in a report. Still, “we could see more downside in gold with further gains in the dollar.” Extend Gains Bullion may extend gains next week, according to 19 of 26 traders, investors and analysts surveyed by Bloomberg. Five forecast lower prices and two were neutral. The rally has pushed spot gold’s 14-day relative strength index, a gauge of whether a commodity or security is overbought or oversold, above the level of 70 viewed by some investors and analysts who follow technical charts as signaling a decline. Today’s reading for spot prices was 71.96. “The pace of gold’s spectacular rally over the past three weeks is unsustainable,” Elizabeth Gregory, a market strategist in Geneva at ACM Advanced Currency Markets, said in a note. “There will need to be a period of consolidation before any move higher. It would not be surprising to see prices dip as low as $1,100 before continuing the rally higher to $1,200 levels.” Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, were unchanged at 1,117.49 metric tons yesterday, according to its Web site. The fund’s holdings reached a record 1,134 tons on June 1. Silver for December delivery in New York lost 1.8 percent to $18.13 an ounce. Platinum for January delivery fell 0.7 percent to $1,433.90 an ounce. Palladium for December delivery declined 3.4 percent to $357.40 an ounce. Platinum held in ETF Securities Ltd.’s exchange-traded products rose 0.6 percent to a record 424,986 ounces yesterday, according to the company’s Web site. To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net

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