By Pham-Duy Nguyen Nov. 6 (Bloomberg) -- Gold futures fell as lower borrowing costs in Europe and the U.K. boosted the dollar, eroding the appeal of the precious metal as an alternative investment. Silver also declined. The dollar gained as much as 1.6 against a weighted basket of six major currencies after the Bank of England and the European Central Bank slashed benchmark interest rates to stimulate slumping economies. Last month, the metal dropped 18 percent, the most in 28 years, as the dollar climbed 11 percent against the euro. ``The dollar strength is just squashing gold,'' said Ralph Preston, a futures analyst at Heritage West Futures in San Diego. ``Gold is behaving like every other asset under the sun. It's deflating.'' Gold futures for December delivery fell $12.70, or 1.7 percent, to $729.70 an ounce at 11:40 a.m. on the Comex division of the New York Mercantile Exchange. Earlier, the price rose as high as $761.30. Silver futures for December delivery dropped 42 cents, or 4 percent, to $10.035 an ounce. Before today, the metal was down 30 percent this year, while gold dropped 11 percent. The ECB reduced its main rate by 50 basis points to 3.25 percent. The BOE slashed its key rate by 1.5 percentage points to 3 percent. Switzerland lowered its benchmark to 2 percent from 2.5 percent. To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

Source