Gold declined in Asia after topping $900 an ounce for the first time in three months last week as a higher dollar against the euro cut the appeal of the precious metal as an alternative investment. Silver also dropped. Bullion lost as much as 1.3 percent to $888.49 an ounce after gaining last week on increased demand from investors for a haven. Prices surpassed $900 on Jan. 23 for the first time since October. The euro declined for a third day, making gold more expensive to European buyers. “Gold was capped by a rising dollar against the euro,” Tatsuo Kageyama, an analyst at Kanetsu Asset Management Co. in Tokyo, said today by phone. Investors are anticipating bearish economic data from Europe, further weakening the euro and European purchases of gold, he added. Gold for immediate delivery fell $8.45, or 0.9 percent, to $891.30 an ounce at 1:51 p.m. in Tokyo. The metal for December delivery on the Tokyo Commodity Exchange jumped as much as 5.4 percent to 2,565 yen a gram ($894 an ounce). The euro declined versus the dollar on speculation business sentiment in Germany slumped as credit losses spread through Europe, fueling expectations the European Central Bank will lower interest rates. The Ifo research institute in Munich may say its business climate index, based on a survey of 7,000 executives, decreased to 81 this month from 82.6 in December, according to a Bloomberg survey. The data will be released tomorrow. European Inflation A report at the end of the week may show European inflation slowed to 1.4 percent in January from a 1.6 percent gain in the previous month, according to a separate survey, increasing speculation that the ECB will lower its 2 percent benchmark rate. Gold has gained 1 percent this year, outperforming other metals such as copper, as investors sought bullion as a store of value while a deepening global recession sent equities and industrial commodities tumbling. Tanaka Kikinzoku Kogyo K.K., Japan’s biggest bullion retailer, said sales of gold coins to local investors surged 121 percent from a year earlier to 158,851 ounces in 2008. “Sales jumped as gold’s role as a hard asset came into the spotlight amid a slump in global economies,” the company said in a faxed statement today. Tanaka said on Jan. 21 sales of gold bars to local investors began to increase in September amid the global financial crisis and the volume of sales jumped in October to the highest level since February 2002. Silver for immediate delivery lost 0.5 percent to $11.92 an ounce at 1:57 p.m. in Tokyo. Platinum for immediate delivery fell 0.5 percent to $953 an ounce, while palladium for immediate delivery fell 2.8 percent to $192 an ounce.

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