By Nicholas Larkin and Kim Kyoungwha Jan. 27 (Bloomberg) -- Gold fell in New York as a stronger dollar curbed the metal’s appeal as an alternative asset and some investors sold bullion to cover losses in equity markets. The dollar was little changed near a six-month high against the euro, while European and Asian stocks declined on mounting concern that China and the U.S. will accelerate plans to unwind stimulus measures as their economies rebound. Gold typically moves inversely to the dollar. “The dollar strength has put some pressure on gold,” said Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. “If stocks continue to fall, people may have to liquidate their gold positions.” Gold futures for April delivery dropped $6.80, or 0.6 percent, to $1,092.70 an ounce on the New York Mercantile Exchange’s Comex unit at 8:38 a.m. local time. Gold for immediate delivery in London was 0.5 percent lower at $1,091.98. The metal increased to $1,094.75 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $1,093.25 at yesterday’s afternoon fixing. The Dow Jones Stoxx 600 Index of European shares lost as much as 1.5 percent to the lowest level in more than a month. It has slid 2.1 percent this year as the U.S. called for limits on risk-taking by banks and China moved to restrict lending and cool economic growth. Fed Rate Decision Gold gained for a ninth year in 2009 as the Federal Reserve kept interest rates near zero to revive growth, driving the dollar lower. The Fed will keep its key overnight rate unchanged today as officials conclude a regular monetary-policy meeting, according to all 93 economists surveyed by Bloomberg. “Investor interest may come back after the Fed assures the markets that they won’t raise interest rates for a considerable period of time and this reignites a decline in the dollar,” said Yu Kyung Kyu, a trader with Eugene Investment & Futures Co. in Seoul. Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, were unchanged for a fifth day at 1,111.92 metric tons yesterday, according to its Web site. ETFs may generate demand for a further 450 tons of gold this year, compared with 700 tons last year, Fairfax IS said in a report. Gold should trade toward $1,300 an ounce in the next six months on increased investment demand, with $1,000 becoming the “long-term floor,” Bradley George and Daniel Sacks, co- portfolio managers of the Investec Global Gold Fund, said in a report. Bullion Delivery The metal will average $1,250 an ounce this year, according to Fairfax. Bullion for immediate delivery has averaged about $1,120 so far in 2010. Platinum, used in catalytic converters in cars, extended its decline on concern that China’s moves to curb lending will slow global growth and weaken auto demand. Platinum for April delivery fell 0.5 percent to $1,524 an ounce in New York. Silver for March delivery in New York slid 0.8 percent to $16.73. Palladium for March delivery lost 1.3 percent to $422 an ounce. ETF Securities Ltd.’s platinum holdings in its U.S. exchange-traded product rose 18 percent to 194,887 ounces as of Jan. 25, according to its Web site. The company’s U.S. palladium assets climbed 43 percent to 399,925 ounces that day. The products listed earlier this month. To contact the reporters on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net.

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