By Chanyaporn Chanjaroen and Glenys Sim Jan. 7 (Bloomberg) -- Gold fell the most in a week in London as a stronger dollar curbed demand for the metal as a hedge against weakness in the currency. Gold added 24 percent last year as the U.S. Dollar Index, a gauge against six counterparts, fell 4.2 percent. The index advanced as much as 0.5 percent today. The metal rose 3.8 percent in the first four trading days of the year. “Given the large rise in the past few days, it’s not surprising to see a correction,” said Eugen Weinberg, a commodity analyst at Commerzbank AG in Frankfurt. “The stronger dollar is also a reason.” Gold for immediate delivery fell as much as 0.9 percent to $1,128.60 an ounce, and traded at $1,132.60 by 11:24 a.m. in London. Gold for February delivery dropped 0.3 percent to $1,132.10 an ounce on the Comex division of the New York Mercantile Exchange. Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, dropped 0.4 percent to 1,126.48 tons yesterday. The 4.88 tons sold is worth about $178 million at today’s price. The metal was little changed at $1,130.75 an ounce in the morning “fixing” in London, used by some mining companies to sell production, compared with $1,130 at yesterday’s afternoon fixing. Interest Rates A prospect of higher interest rates in the U.S., the world’s largest economy, probably will strengthen the dollar further and may take “some of the wind out of the commodity markets’ sails,” said Royal Bank of Scotland Plc’s commodity analysts, led by Nick Moore. The dollar may rally some 15 percent this quarter, they said. “If the dollar turns around in the way that we expect, then the gold price in dollar terms is bound to come under some pressure, although it may hold up reasonably well in local currencies terms,” the analysts said in a report dated yesterday. Gold held in exchange-traded products from ETF Securities Ltd. fell 0.2 percent yesterday to 7.79 million ounces (242 tons), according to data on the company’s Web site. That’s the lowest since Dec. 29, according to data compiled by Bloomberg. Gold’s support, or clusters of buying based on charts, is at $1,100, Weinberg said. Silver dropped 0.2 percent to $18.1750 an ounce. Platinum for immediate delivery fell 0.7 percent to $1,546.25 an ounce and palladium slid 0.9 percent to $424.36 an ounce. To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net

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