By Nicholas Larkin Dec. 4 (Bloomberg) -- Gold fell for a second day in London as a stronger dollar and weaker oil prices reduced the metal’s appeal as an alternative investment. The euro and the pound slipped against the dollar on speculation the European Central Bank and Bank of England will cut interest rates today as the economic slump deepens. Crude oil dropped to the lowest in almost four years after a report showed U.S. fuel demand extended declines. “All eyes are looking towards today’s key interest-rate decisions from both the ECB and the Bank of England,” Leon Westgate, a London-based analyst at Standard Bank Ltd., wrote in a note. “Prices are likely to drift in line with movements in the currency markets.” Gold for immediate delivery lost as much as $9.08, or 1.2 percent, to $764.88 an ounce and traded at $772.03 by 10:57 p.m. in London. February futures were $1.60, or 0.2 percent, higher at $772.10 in electronic trading on the Comex division of the New York Mercantile Exchange. The metal rose to $772.75 in the morning “fixing” in London used by some mining companies to sell production, from $766.25 at the morning fixing. Bullion, which has slid 25 percent since reaching a record $1,032.70 in March, is heading for its first weekly decline since the end of October. The ECB may lower interest rates by a half-percentage point today, and the BOE may cut rates by 1 point to the lowest since 1951, according to Bloomberg surveys of economists. The BOE will announce its decision at midday and the ECB at 12:45 p.m. London time. Investment Falls Gold has fallen 7.4 percent this year as the U.S. Dollar Index, which tracks the currency against six trading partners, gained 14 percent. Crude, down 1.3 percent today at $46.17 a barrel in New York, has plunged 52 percent this year. Falling oil prices typically reduce demand for gold as a hedge against inflation. European investment fell for a second quarter and consumer spending growth halted, the European Union’s statistic office said today. Central banks in New Zealand and Sweden lowered interest rates, while the International Monetary Fund predicts the U.S., Europe and Japan will all contract next year. “Gold still remains at risk to bouts of liquidation as investors/funds cut risk and free up cash,” James Moore, an analyst at TheBullionDesk.com, wrote in a note today. Bullion demand in China, the world’s second-largest consumer, may stagnate this year as volatile prices dissuade buyers and industrial usage drops because of the economic slowdown, according to the China Gold Association. Consumption may be 360 metric tons compared with the record 362 tons last year, while production may rise 2 percent to 276 tons. Precious Metal Assets Gold assets held in exchange-traded funds managed by ETF Securities Ltd. rose to 1.708 million ounces, from 1.615 million on Dec. 2, the Jersey, Channel Islands-based company said today. Platinum assets rose to 166,158 ounces from 136,404, it said. Switzerland’s Zuercher Kantonalbank said gold assets in its exchange-traded fund rose to a record 3.034 million ounces last week, from 3.018 million ounces the previous week. Silver holdings increased to 30.547 million ounces, from 29.593 million ounces. Among other metals for immediate delivery in London, silver fell 0.6 percent to $9.6313 an ounce. Platinum gained $2, or 0.3 percent, to $805.50 an ounce, and palladium was 25 cents, or 0.1 percent, lower at $174.75. Auto Bailout General Motors Corp. and Chrysler LLC executives are considering accepting a pre-arranged bankruptcy as the last- resort price of getting a multibillion-dollar government bailout, said a person familiar with their internal discussions. Automakers account for more than half of global platinum consumption, according to estimates by Johnson Matthey Plc, a London-based metals refiner, trader and researcher. The figures take recycling into account. Auto sales in the U.S., the world’s biggest auto market, are expected to decline 10 percent in 2009, after falling 15 percent this year, according to estimates by Merrill Lynch & Co. “Concerns over industrial demand for the metals, particularly from the auto sector, will continue to keep prices under pressure,” Westgate said. To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

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