By Nicholas Larkin and Kim Kyoungwha Oct. 1 (Bloomberg) -- Gold, little changed in London today, may decline as a stronger dollar curbs the metal’s appeal as an alternative investment. Bullion jumped 1.5 percent yesterday, completing its biggest three-month gain in six quarters and best monthly performance since May, after the dollar fell on signs of global economic recovery. The U.S. Dollar Index, a six-currency gauge of the greenback’s value, rose as much as 0.6 percent today, rebounding from its biggest decline in more than a week. “The dollar will lead gold,” said Bernard Sin, the head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. Immediate-delivery bullion lost 77 cents, or 0.1 percent, to $1,006.92 an ounce by 10:10 a.m. local time. “There’s a possibility” prices may fall below $1,000 an ounce today, Sin said. The commodity rose 5.9 percent last month, extending its quarterly gain to 8.8 percent. December gold futures were 0.2 percent lower at $1,007.20 on the New York Mercantile Exchange’s Comex division. Bullion touched $1,024.28 on Sept. 17, its highest level since rising to a record in March 2008. It is headed for a ninth consecutive annual gain, the longest winning streak since at least 1949. “Gold will continue to move higher in the longer term” as a hedge against a weakening dollar and rising inflation, Sin said. Deutsche Bank Forecast The metal will average $1,150 an ounce next year, 32 percent higher than previously forecast, Deutsche Bank AG analyst Michael Lewis said today in an e-mailed report. “Gold needs a period of consolidation,” said Park Jong Beom, a trader with Tongyang Futures Co. in Seoul. “Still, we believe that the uptrend remains intact given that the dollar will continue its decline.” Holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, increased 1.22 metric tons to 1,095.33 tons yesterday, according to figures on the company’s Web site. The fund’s holdings reached a record 1,134.03 tons on June 1. Among other precious metals, silver rose 0.1 percent to $16.665 an ounce, platinum shed 0.2 percent to $1,295 an ounce and palladium slipped 0.6 percent to $294.25 an ounce. Deutsche Bank raised its silver estimate for next year 33 percent to $20.03 an ounce, its platinum forecast 21 percent to $1,394 an ounce and its palladium forecast 4.5 percent to $321 an ounce. Palladium held in ETF Securities Ltd.’s exchange-traded products fell 1.8 percent to 533,666 ounces yesterday, its Web site showed. Gold holdings were little changed, while silver and platinum assets were unchanged. To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Kyoungwha Kim in Singapore at Kkim19@bloomberg.net

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