By Rachel Graham Oct. 27 (Bloomberg) -- Gold declined in London, extending two weekly drops, as the dollar gained against currencies including the euro, diminishing the appeal of the metal as an alternative investment. Platinum fell to a five-year low. The euro has declined 12 percent against the dollar this month, while the pound is almost 14 percent lower. Equity markets tumbled in Europe and Asia on concern that a weakening global economy will sap corporate earnings, spurring investors to sell assets to raise cash. The rising dollar ``is fuelling the gold selling,'' said Wolfgang Wrzesniok-Rossbach, head of marketing and sales at Hanau, Germany-based Heraeus Metallhandels GmbH, which owns five precious metals refineries. Gold for immediate delivery fell $18.25, or 2.5 percent, to $716.50 an ounce as of 10:01 a.m. in London. Futures for December dropped $14.10, or 1.9 percent, to $716.20 in electronic trading on the Comex division of the New York Mercantile Exchange. Jewelry demand from India, the biggest buyer, has weakened because of a weaker rupee, Wrzesniok-Rossbach said. The dollar has risen 28 percent against the rupee this year. ``If people stop buying cars it's hard to imagine they are buying much jewelry,'' Wrzesniok-Rossbach said. ``We're hearing gold sales to India have virtually come to a standstill.'' Indian demand traditionally gains in the second-half of the year, spurred by Diwali, the Festival of Light. Platinum Plunges Hedge-fund managers and other large speculators decreased their net-long position in New York gold futures in the week ended Oct. 21, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumbered short positions by 99,202 contracts on Comex, the Washington-based commission said. Platinum, used in car exhaust systems and jewelry, fell to a five-year low. Platinum for immediate delivery fell as much as $56.25, or 7 percent, to $744.25 an ounce. That's the lowest compared with intraday prices since Nov. 4, 2003. It last traded at $753 an ounce. ``The last week has seen some commodities fall below marginal cost of production - the level which should induce supply cutbacks,'' Daniel Sacks, a fund manager at Investec Asset Management, said by phone from Cape Town. ``We view metals like platinum as attractive territory.'' Sacks said the marginal cost of production for platinum is about $1,100 an ounce. South Africa is the largest miner of the metal. Among other metals for immediate delivery, silver fell 48.50 cents, or 5.2 percent, to $8.875 an ounce and palladium dropped $1.75, or 1 percent, to $168.25. To contact the reporter on this story: Rachel Graham in London at rgraham13@bloomberg.net

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