Gold rose the most in a week as the dollar dropped, boosting demand for the precious metal as an alternative investment. Platinum declined. The dollar fell as much as 1.3 percent against a weighted basket of six major currencies. Gold and other precious metals generally move in the opposite direction of the U.S. currency. Last year, gold rose the least since 2004 as the dollar advanced for the first time since 2005. “The gold-dollar relationship is the key,” said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. “Eventually, the dollar is going lower, and it’s lifting pressure off gold.” Gold futures for February delivery rose $12.40, or 1.5 percent, to $854.10 an ounce at 11:38 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest gain for a most-active contract since Dec. 31. Some investors may prefer gold to currencies as central banks around the world cut interest rates to stimulate growth, analysts said. The Bank of England cut its benchmark rate to an all-time low of 1.5 percent. The European Central Bank’s rate is at 2.5 percent while the Federal Reserve has slashed U.S. rates to near zero. Last year, gold gained 5.5 percent. Gold priced in euros gained 10 percent and gold priced in pounds rose 44 percent. Alternative Currency “If it’s the case that there’s not a currency people trust, then the metals are going to hold their value,” said Tom Hartmann, a commodity analyst at AltaVest Worldwide Trading Inc. in Mission Viejo, California. “People would start looking at gold as an alternative investment.” Platinum and palladium, which have wider industrial applications than gold, declined, as did silver. All metals excluding gold posted annual losses in 2008 as the U.S. recession worsened. Initial jobless claims unexpectedly fell by 24,000 to 467,000 in the week that ended Jan. 3, the lowest level in almost three months, the Labor Department said today in Washington. The total number of people getting benefits rose week earlier to 4.6 million, the most since 1982. A U.S. payroll report tomorrow may show the economy lost jobs every month in 2008 and the unemployment rate reached a 16- year high in December, according to a Bloomberg survey of economists. “It looks like deflation might be holding on as a theme,” Hartmann said. Silver futures for March delivery fell 3.5 cents, or 0.3 percent, to $11.07 an ounce. Platinum futures for April delivery fell $3.10, or 0.3 percent, to $987 an ounce on the Nymex. Palladium futures for March delivery dropped $2.05, or 1 percent, to $198.50 an ounce.

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