By Nicholas Larkin and Glenys Sim Jan. 19 (Bloomberg) -- Gold, little changed in London today, may fall as a stronger dollar curbs demand for bullion as an alternative investment. Platinum reached a 17-month high. The U.S. Dollar Index, a six-currency gauge of the strength of the greenback, rose after a report showed German investor confidence declined more than economists forecast. Gold usually moves inversely to the dollar. Platinum gained as Bank of America-Merrill Lynch raised forecasts and holdings in exchange- traded products expanded. “The stronger dollar is, of course, negative for gold,” said Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany. “Over the short term, the major driver is now daily foreign-exchange movements.” Gold for immediate delivery lost $2.48, or 0.2 percent, to $1,131.13 an ounce at 12:06 p.m. local time, paring a gain of as much as 0.6 percent. Bullion for February delivery was 0.3 percent lower at $1,130.80 on the New York Mercantile Exchange’s Comex division. The metal was little changed at $1,134 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $1,134.50 at yesterday’s afternoon fixing. “We still believe gold will remain robust, as we expect the dollar to stay relatively weak in the first half,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “Inflation concerns will resurface yet again and help improve the appetite for gold in the near future.” Federal Reserve The dollar index gained as much as 0.6 percent. It has slipped 0.5 percent this year after a 4.2 percent drop in 2009. The currency slumped last year as the Federal Reserve held interest rates near zero to revive the U.S. economy and investors favored higher-yielding currencies and assets on expectations of a recovery from the world recession. Bullion is 7.8 percent below a record $1,226.56 an ounce set on Dec. 3 and climbed 24 percent last year, a ninth annual gain. The metal will average $1,100 this year, above a previous estimate of $1,025, ING Groep NV said in a report. The cost of living in the U.S. rose less than forecast in December, government figures showed on Jan. 15. The consumer- price index rose 0.1 percent following a 0.4 percent gain in November. A report tomorrow may show that wholesale prices in the country were unchanged last month after gaining 1.8 percent, above economists’ median estimate, in November. Palladium earlier advanced to the highest price since July 2008 and platinum gained on speculation industrial and investment demand will increase. Both metals are used mainly in catalytic converters that curb pollution from automobiles. ETF Securities Ltd.’s ETFS Platinum Trust and ETFS Palladium Trust started trading on the NYSE Arca stock exchange on Jan. 8. ETF Demand “Assets are obviously being re-allocated in favor of the newly issued platinum and palladium ETFs,” Commerzbank AG analysts led by Eugen Weinberg said in a note. “They seem to establish themselves as a large demand component alongside the jewelry and car industry demand.” The platinum ETF has bought 195,000 ounces of metal in the past 10 days, more than 10 times daily global production, according to Commerzbank. Platinum for immediate delivery in London rose as much as 1.6 percent to $1,648.50 an ounce, the highest price since August 2008, and last traded at $1,628.13. Palladium gained as much as 1.2 percent to an 18-month high of $463.88 an ounce and was last little changed at $458.25. Higher ETF demand spurred Bank of America-Merrill Lynch to raise its 2010 forecast for platinum by 35 percent to $1,750 an ounce and increase its palladium estimate by 30 percent to $500 an ounce, according to a report dated yesterday. ING raised its 2010 palladium target to $350 from $280 and its rhodium estimate to $2,500 an ounce from $2,000. Silver for immediate delivery declined 0.6 percent to $18.5275 an ounce in London. Silver held in ETF Securities’ exchange-traded products added 0.1 percent to a record 24.362 million ounces yesterday, according to the company’s Web site. Platinum and palladium assets increased 0.1 percent to a record 441,050 ounces and 680,357 ounces, respectively. To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net; Nicholas Larkin in London at nlarkin1@bloomberg.net

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