Gold prices dropped as a strengthening dollar and a slump in oil made the metal less attractive to investors. Silver and palladium also declined. The dollar rose after U.S. consumer spending and durable goods orders were higher than economists’ forecasts. Oil fell as much as 10 percent yesterday. Investors buy bullion as an alternative asset to the dollar and as an inflation hedge. “Concern about deflation is the largest drag on the price of gold,” Kazuhiko Saito, a strategist at Interes Capital Management Co. in Tokyo, said today by phone. “Demand for commodities is decreasing as a global recession is deepening.” Gold for immediate delivery lost 0.7 percent to $842.24 an ounce at 5:17 p.m. in Tokyo. December-delivery gold on the Tokyo Commodity Exchange gained 0.5 percent to settle at 2,453 yen per gram ($845 an ounce). The dollar advanced 0.2 percent to $1.3981 per euro before trading at $1.4021 at 5:20 p.m. in Tokyo. Silver for immediate delivery fell 0.5 percent to $10.33 an ounce. Immediate-delivery palladium lost 1.8 percent to $173.75 an ounce as falling sales forced automakers to accelerate output cuts, sapping demand for the metal used for car catalysts. Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co., Japan’s three-largest carmakers, cut global production last month as the deepening recession and a credit crunch damped demand for new automobiles. Motor Sales Toyota’s output fell 27 percent to 589,505 vehicles in November, led by a 55 percent drop in Europe, the company said in a statement yesterday. The decline is the biggest in at least two decades. Honda’s production dropped 10 percent to 326,176 vehicles, and Nissan’s slid 34 percent to 222,212 units, the companies said separately. Platinum and palladium are used in pollution-control devices in cars and trucks. December-delivery platinum on the Tokyo Commodity Exchange added 0.5 percent to close at 2,486 yen a gram. Platinum for immediate delivery added 0.7 percent to $860.50 an ounce.

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