By Nicholas Larkin July 22 (Bloomberg) -- Gold, little changed in New York and London today, may decline for a second day as a stronger dollar and lower oil prices curb demand for the metal as an alternative investment and hedge against faster inflation. The dollar gained as much as 0.4 percent against the euro today. Gold, which reached a five-week high on July 20, tends to fall as the greenback climbs. Inflation pressures are limited, Federal Reserve Chairman Ben S. Bernanke said yesterday. Crude- oil futures dropped for the first time in six days. “The dollar is stronger and oil is down,” Wolfgang Wrzesniok-Rossbach, head of marketing and sales at Hanau, Germany-based Heraeus Metallhandels GmbH, said by phone today. “Gold will react a little bit.” Gold futures for August delivery added 30 cents to $947.20 an ounce on the New York Mercantile Exchange’s Comex division by 8:24 a.m. local time. Bullion for immediate delivery in London fell 0.1 percent to $947.26 an ounce. The metal slipped to $945.50 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $947.75 at yesterday’s afternoon fixing. Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell 2.13 metric tons to 1,092.41 tons yesterday, the company’s Web site showed. “Physical demand as far as investment is concerned is still slow,” Wrzesniok-Rossbach said. “We’re light years away from demand we saw in the fourth quarter and first quarter.” Oil Drops Some investors buy gold as a store of value as inflation accelerates. Crude oil, used by some investors as an indicator of the outlook for inflation, for September delivery dropped as much as 1.8 percent to $64.40 a barrel in New York. The Fed will keep interest rates low for “an extended period,” Bernanke told Congress yesterday, citing “limited inflation pressures.” “If this were to materialize, it would certainly be bearish for gold in the long run,” Andrey Kryuchenkov, a VTB Capital analyst in London, said today in a note. The Fed cut the benchmark lending rate to as low as zero and expanded credit to the economy by $1.1 trillion over the past year amid the worst global recession since World War II. Some investors say that will devalue the dollar and trigger faster inflation. ‘Huge Uncertainty’ “The long-term future for gold is still very bullish,” brokerage firm GoldCore Ltd. in Dublin said by e-mail today. “There is still huge uncertainty regarding the value of paper currencies in light of various countries’ monetary and fiscal policies.” Silver for September delivery lost 0.6 percent to $13.40 an ounce in New York. Platinum for October fell 0.8 percent to $1,167.10 an ounce. Palladium for September was 0.9 percent lower at $253.75 an ounce. Silver held in ETF Securities Ltd.’s exchange-traded commodities rose 1.8 percent to 18.866 million ounces yesterday, according to the company’s Web site. Gold, platinum and palladium holdings were unchanged. To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

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