By Marianne Stigset Oct. 22 (Bloomberg) -- Gold fell to the lowest in more than a month in London as the dollar strengthened and crude oil slid, reducing the metal's appeal as an alternative investment. The euro fell below $1.28 against the dollar for the first time since November 2006 and the pound tumbled to a five-year low on concern European central banks will cut interest rates as the global economy heads for a recession. Gold has had a correlation of 0.61 to the euro-dollar this year, up from 0.58 last year, Bloomberg data show. A figure of 1 would mean the two move in lockstep. Oil fell to a one-week low in New York. ``Gold has returned to its traditional inverse correlation with the dollar over the past 24 hours,'' James Moore, an analyst at TheBullionDesk.com in London, wrote in a report. ``Deleverage, cash generation and a negative technical outlook seem set to keep gold on the defensive in the coming days.'' Gold for immediate delivery fell as much as $16.60, or 2.2 percent, to $755.05 an ounce, the lowest since Sept. 11, and was at $756.15 an ounce by 11:39 a.m. in London. Futures for December slid $11.40, or 1.5 percent, to $756.60 in electronic trading on the Comex division of the New York Mercantile Exchange. ``The accelerated fall of the euro and crude oil trading below $70 a barrel has sent gold further down below $760 an ounce,'' Peter Fertig, a consultant at Dresdner Kleinwort in Hainburg, Germany, wrote in a report today. Gold fell to $757.50 an ounce in the morning ``fixing'' in London, used by some mining companies to sell production, from $772.00 at the previous afternoon fixing. Gold Rebound? The metal may jump to $1,000 an ounce as investors who have sold copper, platinum and other commodities seek a haven, Paul Walker, chief executive officer of London-based research company GFMS Ltd., said today. Gold's decline is ``collateral damage'' as a drop other commodities prompted investors to sell holdings in indexes comprised partly of gold, he said. The metal has slumped 8.1 percent since Aug. 22. ``In the past three to four weeks, a decoupling of gold and commodities such as platinum, copper and others has been under way,'' Walker said at a Gold Week seminar in Tokyo. ``In the next six to 18 months, volatility in gold markets will be very high and it may try $1,000.'' Central banks have been selling less gold this year, Walker said. Net sales by central banks will probably plunge about 46 percent to 269 tons this year from 501 tons in 2007, he said. Jake Klein, chief executive officer of Sino Gold Mining Ltd., also expects gold to climb above $1,000. ``This environment is good for gold in the longer term,'' he said in a television interview from Sydney. ``On the supply side, you're seeing a significant reduction of gold production globally.'' Auto Slump Platinum fell as much as $55.40, or 6.2 percent, to $838.10 an ounce, the lowest since Dec. 20, 2004. It last traded at $857. The metal, used to curb car exhaust fumes, has slumped 44 percent this year as carmakers including General Motors Corp. and Toyota Motor Corp. cut output as credit turmoil slashed demand. European vehicle sales are in their worst slump since 1996, according to research firm Global Insight, while U.S. auto sales are headed for a 26-year low. Platinum is ``failing to make major gains as negative economic news depresses sentiment,'' Walter de Wet, an analyst at Standard Bank Ltd. in Johannesburg, wrote in a note yesterday. UBS AG this week lowered its short-term forecasts for platinum and palladium to $950 and $190 an ounce respectively, because of weakness in the auto industry. Among other metals for immediate delivery, silver slipped 24.5 cents, or 2.4 percent, to $9.865 an ounce, and palladium slipped $4.75, or 2.6 percent, $178.75 an ounce. Platinum fell to $852 an ounce in the morning fixing in London from $882 at the previous afternoon fixing. Palladium declined to $179 an ounce, from $182. To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net

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