Gold dropped in Asia as a rally in the dollar continued for a third day, reducing the appeal of the precious metal as an alternative investment. The Dollar Index, which tracks the greenback against six major currencies including the euro and yen, gained as much as 0.2 percent to 80.276. The currency would hold its value even if the U.S. lost its AAA credit rating because demand for government securities among foreign central banks is unlikely to wane, according to Bank of Tokyo Mitsubishi UFJ Ltd. “The dollar’s rebound has kept gold from gaining further,” Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd., said today in a telephone interview. Gold for immediate delivery fell as much as 0.4 percent to $947.92 an ounce and traded at $949.92 at 1:08 p.m. Singapore time, extending yesterday’s 0.7 percent loss. Gold for June delivery lost 0.4 percent to $949.70 an ounce on the New York Mercantile Exchange’s Comex division. Still, confidence among U.S. consumers jumped in May by the most in six years, fuelling speculation the economy will recover later this year and accelerate inflation. Concerns about inflation have prompted investors to buy gold as a hedge, adding pressure to supply, said Jonathan Barratt, managing director at Commodity Broking Services in Sydney, by phone today. “I think the producers have actually been caught short by it,” Barratt said. “Having looked at what’s happening with the consumer confidence in the U.S., we are seeing very positive signs of a recovery,” Barratt said. Among other precious metals for immediate delivery, silver dropped 0.5 percent to $14.54 an ounce and platinum was little changed at $1,136.50 an ounce, while palladium fell 0.2 percent to $231 as of 1:09 p.m. in Singapore.

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