By Glenys Sim Dec. 15 (Bloomberg) -- Gold, trading little changed in Asia, may decline as the dollar’s strength damped investor interest in the metal as an alternative investment. The dollar traded near a two-month high against the euro on speculation that the economic recovery will pressure the Federal Reserve to raise borrowing costs. It climbed against 14 of its 16 major counterparts before reports this week forecast to show U.S. industries boosted output and housing starts rebounded. “It’s a dollar play for gold,” Zhang Dajiang, a senior analyst at Pioneer Metals Group, said from Beijing. “As long as the dollar stays resilient, we’re going to see volatility and some weakness in the gold price.” Gold for immediate delivery was little changed at $1,124.90 an ounce at 2:15 p.m. in Singapore, after falling as much as 0.3 percent earlier. February-delivery bullion on the Comex division of the New York Mercantile Exchange was also little changed at $1,125.80 an ounce. Bullion has still increased 28 percent this year while the dollar fell 6 percent against a basket of six major currencies including the euro and yen in the same period. The Federal Open Market Committee will announce its decision on interest rates tomorrow at the end of a two-day meeting. “Gold represents insurance against an inflationary outcome and given the low cost of ownership, it should continue to attract investors as long as the outlook for U.S. short-term interest rates remains unchanged,” Macquarie Group Ltd. analysts led by Jim Lennon wrote in a report. Among other precious metals, silver fell 0.3 percent to $17.34 an ounce, platinum slid 0.2 percent to $1,447 and palladium dropped 0.5 percent to $365.07 an ounce. To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net

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