July 5 (Bloomberg) -- Gold may decline in London, extending a second weekly drop, as a stronger dollar curbs demand for the metal as an alternative investment. The dollar gained for the first time in four days against the euro. Gold last week slid the most since the week ended May 21 after trading on June 28 within 0.2 percent of a record. UBS AG's physical bullion sales to India on July 2 were the most since early January, analyst Edel Tully said. A strengthening dollar "is one reason" for bullion to slip, said Dan Smith, an analyst at Standard Chartered Plc in London. "I think gold is just consolidating after recent heavy losses." Gold for immediate delivery lost $4.65, or 0.4 percent, to $1,206.95 an ounce at 3:15 p.m. in London. Prices dropped 3.5 percent last week. The metal for August delivery was little changed at $1,207.40 in electronic trading on the Comex in New York. Floor trading on Comex is closed today because of the U.S. Independence Day holiday. Gold was little changed at $1,208 an ounce in the afternoon "fixing" in London, used by some mining companies to sell output, from $1,208.50 at today's morning fixing. Gold prices typically move inversely to the U.S. currency. A stronger greenback makes purchasing the metal more expensive. Bullion has climbed 10 percent this year, reaching a record $1,265.30 an ounce on June 21, as investors sought to protect their wealth from prolonged financial turbulence in Europe and on concern the global recovery may slow. The MSCI World Index of equities slumped 4 percent last week. China, U.S. Slowing Growth in Europe's services and manufacturing industries slowed for a second month in June, London-based Markit Economics said today. Reports last week showed manufacturing in China and the U.S. slowed in June, while U.S. employment fell last month for the first time this year and Moody's Investors Service said June 30 it may cut Spain's top credit rating. U.S. service industries probably expanded at a slower pace in June, economists said before a report this week. "The economic outlook remains murky," said Hwang Il Doo, a Seoul-based trader with KEB Futures Co. "Gold has held out above $1,200 an ounce even in a correction mode, which sends a signal to me that it retains the strength to climb." Assets in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, fell for a second day, declining 0.3 metric tons to 1,318.91 tons on July 2, according to the company's website. Global holdings of the metal by ETFs added 0.7 tons to 2,067.6 tons on July 2, according to Bloomberg data from 10 providers. Indian Buying Physical gold-buying gained as prices dipped below $1,200 an ounce, UBS's Tully said today in a report. The metal declined to an intraday low of $1,198.73 on July 2. "We expect to see Indian buying reassert itself, for India's buyers have been all but removed from the market in recent weeks," said Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter. Buyers "shall likely look upon the recent break as an opportunity to own more, not less physical gold." Silver for immediate delivery in London was 0.6 percent lower at $17.755 an ounce. Platinum was 0.3 percent higher at $1,505.35 an ounce, and palladium was down 0.4 percent at $430.75 an ounce. China's passenger-car purchases in June rose 10.9 percent from a year earlier, down from May's 25 percent gain, the China Automotive Technology & Research Center said today. Platinum and palladium are used in pollution-control devices in cars. --With assistance from Kyoungwha Kim in Singapore. Editors: John Deane, Claudia Carpenter.

Source