Gold loses gleam in Asia as dollar gains

Gold declined in Asia as a strengthening dollar reduced the appeal of the precious metal as an alternative investment.

The US currency has gained against 13 of the 16 major currencies this month, and is trading near a six-week high against the yen.

A US report this week may show that durable-good orders have rebounded, suggesting the world's largest economy is weathering the worst housing slump in 16 years. Gold and the dollar typically move in opposite directions.

"Gold is still driven by the US dollar," David Moore, commodities strategist at Commonwealth Bank of Australia in Sydney, said. "Pre-holiday trading is very thin."

The precious metal declined $1.82, or 0.2 per cent, to $809.90 an ounce at 1:08 pm Singapore time after dropping as much as 3.4 per cent earlier. Silver was little changed at $14.38 an ounce.

February-delivery gold on the Comex division of the New York Mercantile Exchange fell $1.90, or 0.2 per cent, to $813.50 an ounce in after-hours trading at 1:10 pm Singapore time.

Gold may gain for a second week on speculation that the rising cost of raw materials will boost demand for the precious metal as a hedge against inflation.

Fourteen of 27 traders, analysts surveyed by Bloomberg from Mumbai to New York last week advised buying gold, the spot price of which rose 2.2 per cent last week to $811.72 an ounce.

The yen was at 114.07 a dollar at 1:11 pm in Singapore from 114.03 in New York on December 21 when it touched 114.21, the weakest since November 7.

Platinum for immediate delivery fell $3.50 to $1,525.50 an ounce as of 11:48 am in Singapore. Palladium gained $1.25 to $356.50 an ounce at 10:26 am Singapore time.