Sept. 22 (Bloomberg) -- Gold plunged to a four-week low as the dollar\'s rally cut demand for the metal as an alternative asset. Silver tumbled the most since October 2008. The dollar climbed to a seven-month high against a six- currency basket after the Federal Reserve moved to lower long- term borrowing costs and said there are \"significant downside risks\" to the U.S. economy. The Standard & Poor\'s GSCI Index of 24 commodities headed for the biggest loss since Aug. 8. Gold touched a record $1,923.70 an ounce on Sept. 6. \"Gold is acutely suffering from what is a general risk-off through the market,\" Sterling Smith, a senior market analyst at Country Hedging Inc., said in a telephone interview from St. Paul, Minnesota. \"The extreme strength in the dollar and the extreme weakness in the euro is creating a very nervous environment in which all leveraged assets are being cut back and sold.\" Gold futures for December delivery slumped $74.10, or 4.1 percent, to $1,734 at 10:53 a.m. on the Comex in New York. A close that level would be the biggest loss since Aug. 24. Earlier, the price touched $1,723.20, the lowest since Aug. 25. Before today, gold was up 27 percent this year, heading for an 11th straight annual gain, as Europe\'s debt crisis and the prospect of faltering global growth boosted the appeal of the precious metal as an alternative asset. Bullion has outperformed global stocks, industrial commodities and Treasuries in 2011. \'Least-Risky Assets\' \"We see the stronger dollar weighing on all commodities, including gold,\" Lv Xiaowei, an analyst at First Futures Co., said from Tianjin, China. \"If the global economy continues to deteriorate, there will come a point where we\'ll see both gold and the dollar going higher together as people look for least- risky assets.\" Open interest in the Comex option to buy gold at $1,800 that expires on Sept. 27 is 10,133 contracts, Bloomberg data show. That\'s \"gaining attention,\" and as the expiry date nears, \"prices may increasingly gravitate towards the $1,800 strike level,\" Edel Tully, a London-based analyst at UBS AG, wrote today in a report. Silver futures for December delivery fell $3.429, or 8.5 percent, to $37.04 an ounce on the Comex, heading for the biggest loss since Oct. 10, 2008. --With assistance from Nicholas Larkin in London and Glenys Sim in Singapore. Editors: Millie Munshi, Steve Stroth To contact the reporter on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net

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