Gold declined for a second day in London on speculation a halt in the dollar’s drop may reduce the precious metal’s appeal as an alternative investment. The U.S. Dollar Index, which tracks the greenback against six other monies, increased as much 0.4 percent today, the third consecutive gain. The metal typically moves inversely to the dollar, which fell every day last week to the lowest this year as measured by the index. “Movement in foreign exchange is the main driver for gold,” Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. “We’ve seen a bit of a recovery in the U.S. Dollar Index.” Bullion for immediate delivery fell $2.32, or 0.2 percent, to $949.68 an ounce by 11:12 a.m. local time. June futures lost $3.90, or 0.4 percent, to $949.40 on the New York Mercantile Exchange’s Comex division. The metal rose to $949.50 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $945 at yesterday’s afternoon fixing. Spot prices gained 2.7 percent in London last week as the Dollar Index slid 3.7 percent. The dollar gained yesterday as a report showed confidence among U.S. consumers jumped in May by the most in six years, fueling speculation about an economic recovery later this year. A rebound might fuel inflation. The U.S. recession will probably end in the third quarter, according to a National Association for Business Economics survey of economists. U.S. ‘Hyperinflation’? “The inverse correlation between gold prices and the U.S. currency will only strengthen once inflation concerns intensify,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. The U.S. economy will enter “hyperinflation” approaching levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said in a Bloomberg Television interview. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published showed. Faber, publisher of the “Gloom, Boom and Doom” report, said he’s still buying gold, which will rise “in the long run.” The metal is heading for a ninth straight annual climb. Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, remained unchanged at 1,118.76 metric tons yesterday, the company’s Web site showed. Among other metals for immediate delivery in London, silver lost 0.7 percent to $14.505 an ounce. Platinum added 0.1 percent to $1,138.40 an ounce, and palladium was 0.4 percent lower at $230.57 an ounce.

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