By Kim Kyoungwha Jan. 26 (Bloomberg) -- Gold declined, extending its loss for a third day, after the dollar rose on speculation China will take more steps to curb bank lending to ward off the formation of asset bubbles. Gold for immediate delivery fell as much as 0.2 percent to $1,096.18 an ounce before trading at $1,097.79 an ounce at 11:45 a.m. in Singapore. The metal, which earlier climbed as much as 0.5 percent, reversed an earlier advance as the dollar rebounded against the six-currency basket. The dollar strengthened and Asian stocks slid for a seventh day after Reuters reported that several Chinese banks will face an additional increase in their reserve ratios, citing sources it didn’t identify. Gold typically moves inversely to the dollar. “Gold is moving in lock step with the dollar,” said Hwang Il Doo, a senior trader with KEB Futures Co. in Seoul. “The rumor of further tightening in China, coupled with falling stocks, is giving a boost to the dollar and affecting commodities as a whole.” Gold rallied for a ninth straight year in 2009 as the Federal Reserve kept interest rates close to zero. The Dollar Index, a six-currency gauge of the greenback’s value, rebounded 0.2 percent, snapping a three-day decline. Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, were unchanged at 1,111.92 metric tons as of Jan. 25, according to figures on its Web site. Spot platinum decreased 0.3 percent to $1,544.50 an ounce, silver weakened 0.5 percent to $17.0475 an ounce and palladium shed 0.6 percent to $440.13 an ounce. To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net

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