By Feiwen Rong Dec. 17 (Bloomberg) -- Gold declined, ending a seven-day rally, on speculation the dollar may have bottomed after the U.S. Federal Reserve cut interest rates to a record low. Bullion fell as much as 1.3 percent as the Fed cut signaled that the difference between the U.S. and European rates can only narrow, reducing the attraction of the euro, analysts said. “The passing of the U.S. interest rate cut should take some ammo away from the gold longs,” Mark Pervan, a senior commodity strategist with Australia and New Zealand Banking Group Ltd. in Melbourne, said in a report today. “Gold should ease from here on profit-taking after strong gains over the previous week.” Bullion for immediate delivery fell as low as $846.75 an ounce and was at $854.60 at 4:41 p.m. in Hong Kong. It reached $859.95 yesterday, the most since Oct. 13. Silver for immediate delivery was down 0.2 percent at $11.2050 an ounce and platinum gained 0.4 percent to $866.25 an ounce. A further drop in the crude oil prices may cool inflation, reducing demand for gold as a hedge, Pervan said. Crude oil has tumbled 70 percent from a record $147.27 on July 11. The so-called VIX, a gauge of how much investors are paying for protection from stock declines, slipped 7.7 percent yesterday to 52.37, the lowest since Nov. 5. That may lead to “gold prices struggling to move much higher for now,” Pervan said. Still, gold in the SPDR Gold Trust, the largest exchange- traded fund backed by bullion, expanded by more than 3 tons to 765.23 tons, according to the company’s Web site. The fund was at a record 770.64 tons Oct. 13, overtaking Japan as the world’s seventh-largest gold holding. ‘Uncertain Outlook’ Lower U.S. interest rates and “uncertainty regarding the economic outlook are also likely to support gold,” Tobias Merath, analyst at Credit Suisse in Singapore, said in a report today. “Platinum doesn’t seem to benefit from a weakening dollar and its performance still depends on the auto industry,” said Wallace Ng, a precious metals trader at Fortis Bank in Hong Kong. The dollar last traded at $1.4017 against the euro. The U.S. currency reached $1.4147 yesterday, the weakest level since Oct. 1, after the Fed cut its lending rate to a “target range” of zero to 0.25 percent from 1 percent. “Eurozone November new car registrations declined 25.8 percent month-on-month, following 14.5 percent decline in October,” said Manqoba Madinane, analyst at Standard Bank Group Ltd. in Johannesburg, in a report today. “This could further strain” precious metals as 80 percent of platinum demand comes from the auto industry. February-delivery gold advanced 0.7 percent to $848.50 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange. Gold for October delivery in Tokyo was little changed at 2,416 yen a gram ($847 an ounce) at 4:43 p.m. local time. To contact the reporter on this story: Feiwen Rong in Singapore at frong2@bloomberg.net

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