Gold fell in London as the dollar strengthened against the euro, reducing the metal’s appeal as an alternative investment to the U.S. currency. The euro declined against the dollar on speculation that the European Central Bank will cut interest rates this week to the lowest since 2005 to help arrest an economic slowdown. Crude oil extended last week’s 12 percent drop on concern output cuts by OPEC will fail to counter a slump in demand. Bullion slipped 2.4 percent last week, the most in more than a month. “The dollar is still the dictator of gold,” Bernard Sin, currency and metals trading chief at Swiss refiner MKS Finance SA, said by phone from Geneva. Physical demand is “still quite quiet” as people return from holidays, he said. Gold for immediate delivery dropped $9, or 1.1 percent, to $845.20 an ounce by 8:48 a.m. in London. February futures slipped $9.60, or 1.1 percent, to $845.40 in electronic trading on the Comex division of the New York Mercantile Exchange. The dollar, which today gained as much as 1.1 percent against the euro, is up 4.7 percent this year. Bullion, down 4.2 percent this year, typically moves in the opposite direction to the U.S. currency. Crude oil lost as much as 3.5 percent to $39.76 a barrel today. Some investors buy gold as a hedge against inflation. Still, the metal may rebound this week on speculation the dollar will slide, according to 17 out of the 28 traders, investors and analysts surveyed by Bloomberg. Six said to sell, and five were neutral. Amongst other metals for immediate delivery in London, silver fell 1.3 percent to $11.12 an ounce. Platinum lost $2, or 0.2 percent, to $991.50 an ounce and palladium was 1.2 percent higher at $195 an ounce.

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