Gold and silver dropped, erasing earlier gains, as the dollar advanced against major currencies, reducing demand for precious metals as an alternative investment. Immediate-delivery gold fell as much as 0.7 percent to $1,491.30 an ounce, reversing a 0.4 percent advance earlier, and traded at $1,491.30 an ounce at 2:49 p.m. in Singapore. Silver futures slumped as much as 5.2 percent to $33.655 an ounce, extending yesterday’s 7.7 percent plunge. “Gold is coming under pressure as the dollar is gaining some ground,” said Ong Yi Ling, Singapore-based analyst with Phillip Futures Pte. “The trend for precious metals in the short term is still bearish.” The Dollar Index, a six-currency gauge of the dollar’s value, rose 0.1 percent, reversing an earlier decline, following yesterday’s 1 percent gain. Demand for gold has strengthened this year as investors sought protection against the prospect of currency debasement and inflation. Gold reached a record $1,577.57 on May 2, advancing 6 percent this year after a 30 percent jump in 2010. Silver led a decline in commodities yesterday as the Standard & Poor’s GSCI Index of 24 futures weakened 3.9 percent. Gasoline plunged as much as 9 percent amid declining U.S. demand for motor fuel. Corn dropped the most allowed by the Chicago Board of Trade on forecasts that U.S. stockpiles will be bigger than analysts expected. Copper fell to the lowest since December. Spot silver weakened as much as 4.2 percent to $33.6875 an ounce, extending an 8.6 percent slump yesterday. The metal, which touched an all-time high of $49.79 an ounce on April 25, tumbled 26 percent last week after five increases in margin requirements on the Comex. The selloff in commodities represents opportunities for long-term investors, with prices rising in the next five to seven years, Chris Hyzy, chief investment officer at U.S. Trust Co., said yesterday. Immediate-delivery palladium shed 1.1 percent to $710 an ounce, while platinum weakened 0.9 percent to $1,760.95. To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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