By Nicholas Larkin and Kim Kyoungwha Feb. 8 (Bloomberg) -- Gold gained from a three-month low in New York as a halt in the dollar’s rally increased demand for the metal as an alternative investment. The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, fell after last week climbing to the highest level in almost seven months. Gold futures, which usually move inversely to the dollar, slid to a three-month low of $1,044.50 an ounce on Feb. 5. “The dollar is down,” said Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany. The metal’s sudden drop last week is also “a good indicator that prices may rise,” he said. Gold futures for April delivery rose $13.70, or 1.3 percent, to $1,066.50 an ounce on the New York Mercantile Exchange’s Comex unit at 8:26 a.m. local time. Prices declined 2.9 percent last week, a fourth consecutive drop. Gold for immediate delivery in London was little changed at $1,066.72. The metal climbed to $1,070 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $1,058 at the afternoon fixing on Feb. 5. Gold futures’ relative strength index, a gauge of whether a commodity or security is overbought or oversold, plunged to 40.55 from 50.08 on Feb. 3. “From a technical perspective, gold was heavily oversold,” Fertig said. Lunar New Year Physical buying may also support prices ahead of China’s weeklong Lunar New Year holidays starting Feb. 14, London-based broker ODL Securities Ltd. wrote today in a report. The dollar index lost as much as 0.4 percent today. It posted a third straight weekly gain last week as the euro fell on concern that nations such as Greece may struggle to close budget shortfalls. European finance ministers said at the weekend they will help ensure that Greece tackles its deficit. “While gold’s longer-term investment credentials remain sound, the metal is temporarily caught up in the slipstream of uncertainty currently being generated,” said Gavin Wendt, a senior resource analyst with Mine Life Pty Ltd. in Sydney. Eight of 16 traders, investors and analysts surveyed by Bloomberg said bullion would fall this week. Six forecast higher prices and two were neutral. The metal should trade at $1,000 to $1,200 an ounce this year and may advance as high as $1,500 after that, Mark Bristow, chief executive officer of Randgold Resources Ltd., said today in a television interview. Fourth-quarter profit more than tripled on surging gold prices, the company said today. SPDR Holdings Metal holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, increased 1.83 metric tons to 1,106.38 tons on Feb. 5, according to figures on the company’s Web site. Gold in ETF Securities Ltd.’s European and Australian exchange-traded products rose 1.2 percent to 7.803 million ounces on Feb. 5, its Web site showed. Silver for March delivery in New York rose 2.2 percent to $15.15 an ounce. Platinum for April delivery added 0.6 percent to $1,483.60 an ounce. Palladium for March delivery gained 0.8 percent to $401.55 an ounce. Palladium may average about $400 an ounce this year as “fundamentals” for the market improve, Sandy Wood, executive head of Anglo Platinum Ltd.’s commercial unit, said on a conference call today. The metal, used in automotive pollution- control gear alongside platinum, averaged about $267 last year. 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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