Gold dropped for a third day as the dollar extended gains, reducing the appeal of the precious metal as an alternative investment. Bullion often moves in the opposite direction to the dollar, which gained for a second day against the euro as U.S. President- elect Barack Obama crafted a package of infrastructure spending and tax cuts to create three million jobs. The dollar has gained 0.4 percent this month while gold has lost 1.1 percent. “The stronger dollar dragged gold lower and trimmed crude oil’s gain,” Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd. in Tokyo, said today by phone. “However, the market has found support from mounting tensions in the Middle East.” Gold for immediate delivery fell 0.4 percent to $872.15 an ounce at 4:15 p.m. in Tokyo after trading as low as $868.40. Bullion rose 5.8 percent last year, a record eighth annual advance. Silver for immediate delivery fell 1.4 percent to $11.41 an ounce. The metal fell 23 percent last year, its worst performance since 1984. February-delivery gold lost 0.7 percent to $873.30 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange. Crude oil for February delivery rose 2.7 percent to $47.59 a barrel at 4 p.m. Tokyo time. The dollar last traded at $1.3909 per euro from $1.3921 late in New York on Jan. 2. Bullion earlier rose as high as $884.65 on speculation that escalating geopolitical tensions in the Middle East and higher crude oil would boost the appeal of the metal as a haven and hedge against inflation. Gaza Conflict Oil rallied after thousands of Israeli troops crossed into the Gaza Strip, escalating a conflict in the Middle East, the largest oil producing region. Troops crossed the border on Jan. 3 in a bid to capture bases Hamas militants have used to launch rocket attacks on the country. December-delivery gold on the Tokyo Commodity Exchange added 0.8 percent to close at 2,594 yen per gram ($878 an ounce) in half-day trading. December-delivery platinum ended up 4.3 percent at 2,766 yen a gram. Immediate-delivery platinum fell 0.7 percent to $940.25 an ounce. The metal, used in pollution-control devices in cars and trucks, fell 39 percent last year, the steepest drop since at least 1988.

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