Gold tumbled 4.8% on speculation the US Congress will approve a plan to revive credit markets, reducing the appeal of the precious metal as a haven. Silver plunged the most in more than two years. The dollar rose to the highest in a year against a basket of the euro, yen and four other major currencies after the US Senate authorized the government to buy troubled assets from banks. Gold gained 5.5% in September as Lehman Brothers collapsed and the US took over American International Group, Fannie Mae and Freddie Mac. ''The dollar is up big on the Senate passing the bailout plan,'' said Matt Zeman, a metals trader at LaSalle Futures Group. ''In terms of gold, there's a lot of optimism that this bill is going to pass in the House. The safe haven is gone, and gold definitely suffers if this thing is passed.'' Gold futures for December delivery fell $US43 to $US844.30 an ounce on the Comex division of the New York Mercantile Exchange. That reduced gold's gain this year to 0.8%. The precious metal reached a record $US1033.90 in March as the euro headed for an all-time high against the dollar in July. Silver futures for December delivery dropped $US1.65, or 13%, to $US11.12 an ounce, the biggest one-day percentage decline since June 13, 2006. The metal has plunged 25% this year. The US House of Representatives is set to vote on the banking measure tomorrow. Interest Rates The dollar rallied on expectations the US will act faster than Europe to rescue the credit markets. The European Central Bank kept its benchmark rate at 4.25% today. The US federal-funds rate is at 2%, down from 5.25% in September 2007. A bailout will ''not be positive for gold in the near term,'' said Adrian Day, president of Adrian Day's Asset Management. Investors may sell commodities and invest in ''beaten-down'' financial stocks, he said. Gold may rebound on renewed demand for an alternative asset, said Jeffrey Christian, the managing director at CPM Group. ''The passage of the bailout could increase safe-haven demand for gold as investors realize the plan will not stabilize the US financial markets, but only compound problems,'' Christian said. Since the second quarter of 2007, banks worldwide have posted $587.7 billion in losses and writedowns related to investments in subprime mortgages. On September 30, investment in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, rose a record 755.3 metric tons, up 23% from September 10. ''The bailout may restore some confidence in the immediate term, but it will not help the economy fundamentally,'' said Day. ''It will do little to restore balance sheets and give people confidence to boost lending, but will hurt the dollar.''

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