By Nicholas Larkin Dec. 9 (Bloomberg) -- Gold fell in London as the dollar gained and oil declined, reducing the metal’s appeal as an alternative investment and hedge against inflation. The U.S. Dollar Index, which tracks the currency against six trading partners, rose 0.6 percent, while oil declined on signs the global recession may be deeper than anticipated. Bullion, which gained the most in two weeks yesterday as U.S. President- elect Barack Obama pledged to spend more on infrastructure, generally moves inversely to the euro-dollar exchange rate. Gold “most of the time is moving in line with the dollar and also the oil price,” said Wolfgang Wrzesniok-Rossbach head of marketing and sales at Hanau, Germany-based Heraeus Metallhandels GmbH, which owns five precious metals refineries. Gold is also being affected “by a lack of physical demand.” Gold for immediate delivery lost $3.70, or 0.5 percent, to $769 an ounce by 8:55 a.m. in London. February futures were little changed at $769.10 in electronic trading on the Comex division of the New York Mercantile Exchange. Reports later today will probably show German investor confidence dropped to near the lowest on record in December, and pending sales of existing U.S. homes fell in October, according to Bloomberg surveys of economists. Japan’s economy shrank at an annual 1.8 percent in the third quarter, faster than the government initially estimated, the Cabinet Office said. Among other metals for immediate delivery in London, silver declined 0.1 percent to $9.985 an ounce. Platinum slipped $21.25, or 2.6 percent, to $810.25 an ounce, and palladium was $2.75, or 1.6 percent, lower at $174.25. Bailout Proposal Platinum, used in autocatalysts, gained the most in two weeks yesterday after Congressional Democrats sent President George W. Bush a draft proposal for a $15 billion, short-term rescue of U.S. automakers. “With Japanese GDP sliding deeper in the red and markets anticipating poor German and U.S. economic sentiment data, platinum could come under pressure today,” Walter de Wet, an analyst at Standard Bank Ltd. in Johannesburg, wrote in a note. The silver metal may trade at $1,370 an ounce in 2009 and advance in each of the following two years as producers cut output to boost prices, according to Credit Suisse Group. To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

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